Detailed Narrative
Strong Q3 FY26 Financial Performance
Everest Kanto Cylinder Limited reported a strong Q3 FY26, with consolidated revenues reaching Rs. 365.1 crore. Consolidated EBITDA grew 48% year-on-year to Rs. 59.2 crore, and EBITDA margins expanded by 534 basis points to 16.2%. The company's consolidated PAT saw a significant increase of 98.9% year-on-year, totaling Rs. 35.7 crore. Standalone performance also remained robust, with revenues of Rs. 247.0 crore and EBITDA margins at 23.1%, contributing to a 57.6% YoY growth in standalone PAT to Rs. 36.0 crore.
Profitability Driven by Product Mix and Cost Discipline
The notable improvement in profitability was attributed to improved realisations, a favourable product mix, and continued focus on cost discipline. Management highlighted a strategic shift towards higher-end products, including those for the commercial vehicle (CV) market, defense, and the semiconductor industry. This product mix strategy is expected to sustain EBITDA margins in the 15-17% range going forward⏳, optimizing both volume and value for profitable growth.
Domestic and International Operations Overview
India operations were the primary contributor to overall performance, benefiting from steady demand in CNG and industrial applications, particularly with increased CV CNG volumes. In the US, operations showed healthy progress supported by a strong order pipeline. Conversely, Dubai operations remained subdued during the quarter, though management is focused on strengthening market engagement and expects improvement towards breakeven in FY27.
Strategic Capacity Expansion and Capex
The company made significant strides in capacity expansion, commencing operations at its greenfield Mundra facility with one production line now active. The remaining two lines are expected to be established in the coming months, which will increase capacity by approximately 15%. An additional capex of Rs. 30 crore was approved for Mundra to further enhance capabilities. In the US, a USD 5.5 million capex was approved for the wholly-owned subsidiary, CP Industries, to boost manufacturing capabilities for larger diameter and Type 4 cylinders, with an expected incremental revenue of Rs. 100 crores by FY27-FY28.
New Market Entry: Egypt Facility Progress
The Egypt facility is progressing steadily and is anticipated to commence operations by May 2026. This new facility is strategically positioned to address domestic demand and regional market requirements, further strengthening the company's global manufacturing footprint. Management expects the Egypt facility to contribute approximately Rs. 50-60 crores in revenue during its first year of operation, with customer approvals already secured.
Order Book and Future Outlook
The US business currently holds an order book of around $75 million, which is expected to be executed over the next two years. This order book, along with the US capex, is backed by customer contracts, providing strong visibility. Overall, the company is optimistic about the improving demand environment and the progress of its strategic initiatives, targeting a 15-20% growth in both top line and bottom line for FY27.