Detailed Narrative
Robust Revenue Growth Driven by US Market Performance
Everest Kanto Cylinder Limited demonstrated strong financial performance in FY25, with consolidated revenues increasing by 22.6% to Rs. 1,499.2 crore. The fourth quarter of FY25 also saw significant growth, with consolidated revenues rising 29.5% YoY to Rs. 422.1 crore. A key driver for this growth was the exceptional performance of the US business, which recorded a 42% increase in revenues to Rs. 374 crore and an 86% surge in EBIT to Rs. 58 crore for FY25, highlighting strong international demand.
Profitability Impacted by Margin Pressures and Exceptional Items
Despite the robust topline, consolidated PAT for Q4 FY25 stood at Rs. 13.3 crore, significantly impacted by an exceptional loss of Rs. 6.5 crore. This loss was attributed to the impairment of idle assets and capex under progress in Gujarat plants. Furthermore, the India business experienced a 700 bps drop in margins during Q4 due to pricing pressures on long-term contracts, while the UAE business also faced revenue and margin declines due to similar pricing challenges and an unfavorable product mix.
Strategic Expansion and Capacity Enhancement Initiatives
The company is actively pursuing strategic expansion projects to bolster its manufacturing capabilities. The Mundra facility is progressing as planned, with Rs. 50 crore of CAPEX remaining, and is expected to enhance domestic capacity and export servicing. The greenfield project in Egypt is also on track for completion by Q3 FY26, with approximately 50% of its CAPEX still pending, strategically positioning the company to capitalize on Egypt's CNG adoption goals.
Order Book and Future Margin Outlook
Everest Kanto maintains a healthy order book, totaling approximately Rs. 859.25 crores, comprising ~$55 million from the USA, Rs. 300 crores from India, and Rs. 100 crores from UAE. Management expressed confidence in margin recovery, guiding for India business margins to return to 12-15% from the next quarter and targeting an overall PAT margin of at least double digits for FY26. USA margins are expected to continue around 16%.
Capital Allocation and Shareholder Returns
In terms of capital allocation, the Board recommended a final dividend of Re. 0.70 per equity share for FY2024-25. The remaining CAPEX for the Egypt and Mundra projects, totaling Rs. 125 crore, is being funded through a new Rs. 20 crore term loan from India, with the balance for the Egypt project already fully sanctioned, ensuring financial flexibility for ongoing growth initiatives.