This small-cap cylinder manufacturing stock jumped more than 15 per cent in the last two trading sessions!
About 60 per cent of the company’s revenue comes from the CNG business, while 40 per cent comes from industrial and speciality gases like Nitrogen, Helium, Argon, etc.
On December 26, Everest Kanto Cylinder Ltd was the top gainer among S&P BSE group ‘A’ companies. The shares of Everest Kanto Cylinder Ltd closed trading at Rs 108.55, surging 6.5 per cent from its previous close of Rs 101.9. The stock opened at Rs 105.7 and made an intraday high and low of Rs 116.7 and Rs 105.7, respectively.
Everest Kanto Cylinder Ltd is involved in the business of manufacturing high-pressure gas cylinders and other equipment used to compress and store natural gas, liquids and air. Everest Kanto’s cylinders are also used in fire extinguishers, healthcare, defence, food and beverage sectors.
The company caters to major OEMs and City Gas Distributors. Bajaj Auto Limited, Tata Motors Limited, Ashok Leyland, Torrent Gas, HPCL, IOCL, Safepro, and Ecofuel are among the company’s clients.
As per FY22, the company has ROE and ROCE of 33.9 per cent and 40.9 per cent, respectively. About 60 per cent of the company’s revenue comes from CNG, while 40 per cent comes from industrial and speciality gases like Nitrogen, Helium, Argon, etc. The company has two manufacturing plants which are operating at 90 per cent utilisation as of the FY22 period ending. The company has a current capacity of 1.1 million cylinders which is expected to grow to 2 million by FY2025. The management is focused on increasing the mix of value-added products.
Fast-growing city gas distribution infrastructure is forcing the demand for high-pressure cylinders for the storage and transportation of natural gas across the country. The great cost difference between the usage of natural gas and liquid fuels in automobiles is leading to the increasing adoption of CNG in automobiles, triggering the demand for high-pressure cylinders.
The company has a market capitalisation of Rs 1218 crore and its shares are trading at a PE multiple of 6.87x.