- Consolidated revenues increased by 28% Y-o-Y in Q1 FY25, driven by a steady increase
in demand across both our domestic and international markets - CNG segment sales volume reported a YoY and QoQ increase, making a strong
contribution to the overall results - USA business up 63% to
Rs.90cr, India up 18% to Rs.196cr, UAE up 6% to Rs.52cr. - Consolidated PAT stood at Rs. 28 crore. Key factor here could be deferred tax.
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https://www.bseindia.com/xml-data/corpfiling/AttachHis/baf53ccb-c077-46c9-9c5b-fdf272ad8df7.pdf
India and Middle East sales and profits have come down.
USA has higher sales and profits due to project orders… which are irregular. …
According to me results are not great… but stock up 16%…
New plant coming up in Gujrat even when utilisation is 70%… dont understand the strategy…
4 Likes
Do they experience inventory loss due to correction of steel prices and vice versa. Not sure why India business margin and profits are down despite increase in revenue.
The need for new plant could be due to initial success and visibility of new product line of CNG cylinder in motorcycles.
https://www.business-standard.com/companies/news/riding-high-bajaj-auto-s-cng-motorcycle-races-ahead-with-record-sales-124102501474_1.html
Long wait for con call. The management better be occupied in some important business initiative for such a long delay otherwise it does not reflect good on management
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if you have been following the company then you will realise that nothing reflects good on management of EKC.
Transparency is very low… why they stopped setting up new plant in Gujarat it was not clear neither it is clear why they are going ahead with completion when sales and capacity utilisation in India is low… but stock keeps moving… both ways…
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Wil CNG prices increase to same level as petrol/ diesel?? CNG vehicles sales will stop again.
even if 3 to4 Rs increase can stop the sales asdifference will not be much…
Capex: Company has an approval of an additional ₹50 crore capex for new manufacturing lines at the Ratadiya, Mundra project.
After listening to concall one is even more confused… anyway what i understood:
- increase in CNG prices will not impact sales ( Difficult to believe that too when CNG prices are expected to increase more in coming quarters)
- new plant in Gujarat will come up in FY 26 - adding to Rs. 300 cr sales p.a.
- current capacity utilisation is 70% and growth is 12% p.a. - then why are new plants being set up ?
- Egypt plant will come in june/july 2025 (last call they had said march 25) which will reach 100% utilisation within 6 months and add 200 crs p.a. in sales. Difficult to achieve in 6 months !!
- 2 wheeler is not a very big market but may grow
- with all expansions the company will grow only 12% p.a.
Dont know why the company is getting a multiple of 20 without much growth and low margins.
Stock price keeps moving with huge volumes !!
3 Likes
After listening to the con call, I realised that 80% of the questions were answered by the owner through someone prompting
he gave very shallow answers and personally looked disinterested to me. Very easy pass with such Owners even when the opportunity size is decent.
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Rs 128 cr GST notice due to wrong classification of product. they are selling the product to auto companies to be put in the vehicles but not classifying as auto component… this defies logic !!
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In the CNG segment sales of the company do we know what proportion comes from cascades and what proportion comes from cng cylinders used in CV / PV etc ?
Nobody knows this.. even the promoters of the company dont know !!!
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As I understand in the CNG segment they cater to 1) cascades needed at station 2) cascades needed for transportation 3) onboard cylinders. Given that an aggressive cgd roll out is already under way, is it fair to say that point 1,2 from above is already happening and point 3 will be a higher upside when cng prices decrease consistently ?
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Has there been any update on the GST matter. 128 Cr if payable is a huge hit to the company.
Nobody attended their investor call.. seems to be lost cause.. but price movement is surprising- 16% up on Aug 14 and then back to 136..
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Well the management on the call seemed to shy away from giving any guidance even qualitatively for future. So investors are not confident.
For international business management sounded confident of maintaining growth for this year, but we should take that with a pinch of salt.
For domestic business,
- If they can keep the margins steady and continue the growth of last year
- GST matter likely getting resolved with upcoming GST rationalization
- Overall fillip to gas based auto segment (Boost with GST and acceptance of Gas powered vehicles due to cost benefit and expanding network) and even non auto segments coming up (Drone, CBG, Hydrogen), there should be good growth for the gas cylinder industry and even for players with not so great management as well.
We could see a decent growth and possibly a rerating from here on if the domestic business continues to delivers and international business remains steady. But we need to be watchful here.
Invested small quantity and biased.
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one basic fact about investing - everything depends on management of company. However good the industry company will not do well if management is poor. EKC is perfect example. Even I had the view about EKC a few years back that since industry is good inspite of bad management EKC will do well but i was proven wrong.
One more company which i have recently studied is Dishman Carbogen - it is in CDMO (one of the most attractive sectors in India) - you can do a peer analysis and you will know what i mean.
Back to EKC - GST issue is very large and i dont know how a rationalization now will sort out the tax implication retrospectively. Even if it happens it will be for the future. To my mind the issue raised by the tax authorities is genuine - the classification EKC has done is incorrect.
EKC has a history of messing things up.. and history will surely repeat itself here.
Also one more fishy thing is the volumes of trade in this counter - it is very high given free float is only 33%. here again anybody can check the volumes and get to know
6 Likes
Poor Q2 results validate my point of view… opportunity in this business is large but being taken by competitors..
i see major correction in EKC stock price as future for company is bleak..
better to exit than to wait for it to go below 100..
As expected EKC has gone down quite a lot.
Once GST issue goes against them - which is highly likely as they were clearly charging lower GST deliberately - stock is going to go below 100. Even on investor call they did not say much about this..
EKC should stop having investor calls as they dont answer any of the investor questions
1 Like