Russia- Ukraine conflict and subsequent LNG/ CNG price hike was actually a black swan event… gas prices went up much more than oil prices - Asia spot LNG prices went up more than 10 times!!
While US LNG domestic price has gone below USD 3 due to evacuation constraints, it has helped reduce Asia spot prices to USD 20 levels. When Freeport opens up Asia gas prices will drop to USD 10. Over the next 2 years gas supply will again jump due to new production leading to glut - it will go back to USD 2 levels for spot in Asia/ India.
CNG prices in India will start coming down by March 2023. With ONGC expected to increase supply from KG basin, CNG story will be back and hopefully EKCL will be back to 300…
Disclosure: i am not invested yet(i am just in the initial study phase) but have been watching Everest kanto with a lot of interest.
Today the price crashed by nearly 10 percent to 52 week low and it’s now available below book value. Considering results were around Feb 11th last year i won’t be surprised if this crash is something to do with that(Ie bad results expected/known soon). Considering the company has reduced interest costs , have tried to change their corporate image by starting concalls 2 years ago and paying a dividend (even if it’s just a 3 to 4 percent payout last 2 years) and with high roce… even with the macro reasons the current price doesn’t make sense(though the high in 2018 before the CG allegations was mid 70s and looks like some sort of support in its chart so maybe that’s where it’s headed). The pressure on bottom-line should last for a few quarters and the company isn’t at risk of going bankrupt before then but the market makes it look so. Is there something that’s happening that we don’t know about(apart from the beautifully explained macros/black swan regards cng above). Maybe something in the budget that affects it adversely… though if anything they spoke about reducing cng costs by reducing tax on biogas blended in it hence making it more viable which looked like a positive ? Even if the margins have crashed so badly that profits would be at single digits this quarter… but considering this will definitely improve over the next few years i fail to see why the beating has been so heavy(at current prices even their paltry 3 to 4 percent payout would be a nearly 1 percent dividend when the good times come back)
As mentioned above I’m not invested but it’s under my radar due to the obvious value(trap?) Here
Will just comment that CG issue was not true and banks gave a clean chit to the company. Logically also allegations didnt make sense. the person is known to make frivolous allegations. Promoters own 67% in company with almost zero bank debt so dont see a reason why they should get involved in such activities. The only issue with company was wrong decision to expand very fast in India and China. They have learnt and thats why they were expanding very slow in India - and they were luckily proven right - as demand slumped due to CNG price rise. Demand will be back to normal in a quarter and hopefully expansion will be back on track - also JV in Egypt.
There is no doubt that LNG/CNG and Hydrogen are the fuels of the future - even Bio gas. Which all require cylinders !! Patient investors will benefit.
Thanks @Aarti . Spent the hours since posting above going through the CG allegations and I tend to agree with you. Also with micro caps looking for information on price drops in a given day is next to impossible and in a lot of cases it’s totally out of our hands (it could be the upcoming results or it could be just general panic). Even charts etc don’t tell much at microcap levels. Overall I think the current CMP can be attributed to the dependence on outside factors including wars + the government to boost cng prospects and a lot of people feel that without a price differential the entire industry has taken a de rating and doesn’t seem feasible… though all that can change in a few quarters. In this forum itself it’s gone from being a darling to just you and a couple others holding the fort. Im very tempted to join you’ll but will wait it out until the upcoming results and concall to decide. Cheers
In this forum, I noticed there are several times people talking about the Everest Kanto bad corporate governance in the past. I tried googling / trying to understand what was the issue but couldn’t get any. could someone help me to understand what was it in the past ?
improve research skills a bit. dont mind 
As expected this quarter was a washout… they would have just about eeked a profit if not for the exceptional circumstance 19 crore hit due to “not fulfilling terms of contract with a customer”. Curious to know details about this. It’s a rather large amount for a company so small! Hopefully this is the current business bottom considering cng has begun dropping in price(just a paltry rs 2.5 last week). Q4 should be low single digits profit too by the looks of it.
While numbers are bad, I am optimistic about future performance.
Severe headwinds faced in last 2 quarter - CNG prices in India more than doubled (international spot had gone up 15 times to USD 65mmbtu). Now India CNG prices are coming down. In few months international prices should drop to USD 10 levels. Demand should pick up and revenues & profits should go back to last year level.
Given all of this performance has been decent with small profit (standalone). Consol loss due to one-time penalty of 19cr by customer which is non-recurring i guess.
Another glaring example of corporate governance if there is penalty event which has occurred in September December qtr to the tune of 19.9 cr why was it not mentioned to the exchange. It must have been mentioned atleast in jan this is a breach of disclosure norms. Once a fraud always a fraud.
Secondly usa and Hungary total loss is 32 cr it got saved because of 16 cr they received from us government grant and 4.5 cr from sale of machineries otherwise the loss is very heavy.
Generally quarterly results is accompanied by investors presentation but this time nothing.
Whether they turn around or not there corporate governance is very bad since I hold a small qty iam making a complaint to scores regarding the non disclosure of the penalty at the time of the event.
Disl have trusted this manegement twice but now disposing my holding
There has been a lag of 2 days between investor presentations/concalls and the results last few quarters. Could be the same now.
Last concall ie mid November management was still saying usa and industrials is going good etc so not sure what went so drastically wrong From November 15th to December end.
This defo needs further explanation since the loss outside India is huge. Hopefully the management doesn’t ghost us the next 2 quarters even though it will be painful for them to explain things and try to make predictions at the bottom of the cycle like this. Still have hope in this company at current prices but if they don’t do a call/presentation(hopefully in a few days) to explain then it sets a worrying precedent for the future and i won’t be adding to my current small stake. Either way they should set up the call date and presentation by tmrw/latest dayafter so it’s a matter of waiting until then
Looks to be a kitchen sink quarter given business headwinds. Probably next quarter remains as bad but there was an expectation that management would improve on disclosures and cg unfortunately that’s not the case.
Disclosures from the company coming in today. Hopefully will be followed by presentation and concall soon to explain what’s happened outside of India. As usual, Too much reliance on India cng growth story 2030 . Will update this post with the investor presentation if and when released.
Disc: invested with a small 1st tranche. Realised I’ve bought a ticket to a roller coaster ride now(was fine with and expected everything up until the exceptional and overall losses in their subsidiaries) and decided to hold off on further investments until things stabilize a bit post q4. Not a sebi advisor
- We did not review the interim financial results of four subsidiaries included in the Statement, whose
financial information (before eliminating intercompany transactions and balances) reflect total revenues
of ₹ 11,260 lakhs and ₹ 36,582 lakhs, total net (loss) after tax of ₹ (3,296) lakhs and ₹ (2,056) lakhs,
total comprehensive (loss) / income of ₹ (2,513) lakhs and ₹ 1,698 lakhs, for the quarter and
nine-months period ended on 31 December 2022, respectively, as considered in the Statement. These
interim financial results have been reviewed by other auditors whose review reports have been furnished
to us by the management, and our conclusion in so far as it relates to the amounts and disclosures
included in respect of these subsidiaries is based solely on the review reports of such other auditors and
The above is the auditor report cp industries is holding company of cp industries inc which is usa based
Now non fulfilment of contract when management is saying that demand is dull even eliminating 19.9 cr penalty the loss is 13 cr on operations alone.
Also there is gain of 9.7 cr on foreign exchange and 16 cr usa grant so an unusual income of 26 cr and 4.75 cr from disposing machinery and other gain of 2 cr . If there no foreign exchange gain of 9.7 cr and 4.75 cr machinery sales the actual loss on this qtr excluding penalty 32 cr and including penalty is 52 cr on an operation of just 115 cr
Until some explanation comes this looks another issue
Written an email seeking explanation
Request seniors to kindly look into the pl statement and auditors remark and shed more light
Demand for CNG vehicles (and also CGD network expansion) has come down a lot due to very high LNG/CNG prices - which is a known fact. The uptick in demand of CNG vehicles mentioned by EKC also has come as CNG prices have been coming down.
There is nothing much company can do in such circumstances - aptly referred as a "black swan
event by Girish Wagh, ED, Tata Motors. If one thinks that CNG vehicle demand will revive then stay invested else better to exit.
Disclosure - I remain invested.
While I agree with you @aarti if we were just looking at the India business… the huge loss abroad is something that we need to know more about. Even without the penalty it will deplete all of the cash reserves if it repeats for a few quarters and there’s no white knights in the form of grants etc. At this point it would make more sense to give away the usa business for free! In times like this management need to come out and face the music and clear doubts… as of this moment it’s been a full 48 hours since the result came out and there’s no sign of an investor presentation or concall(usually its a 2 day lag so maybe there’ll be some info over the next few hours). If they think that just the one paragraph released 2 days ago talking about the year 2030 would give investors confidence then they are sorely mistaken. If there’s no presentation or call details over the weekend then one can assume management is hiding during the bad times and only showing up when things are going well. That’s a bad sign. Note that if they present/concall and explain the penalty and losses abroad then my fears would definitely be allayed. As of now things look bleak though considering no info from management and supports breaking left and right.
Edit: Management no longer hiding. Investor presentation out(though with no real explanations for the subsidiaries) and concall on 15th! Little bit of faith back in the management again. IF the USA losses apart from the penalty were truly one offs and management gets some sanity back into the picture then this story could start running again especially from the current dirt cheap valuations.