Everest Kanto Cylinder Limited ($EKC)

Ladies and gentlemen, good day, and welcome to the earnings conference call of Everest Kanto Cylinder Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mitesh Jain from CDR India. Thank you, and over to you, sir.

Thank you, Davin. Good evening, everyone, and thank you for joining us on Everest Kanto Cylinders Q4 and FY '26 Earnings Conference Call. We have with us Mr. Puneet Khurana, Managing Director; and Mr. Sanjiv Kapur, Whole-Time Director and Chief Financial Officer of the company. We will initiate the call with opening remarks from the management, following which we will have the forum open for a question-and-answer session. Before we begin, I would like to state that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation shared with you all earlier. I would now request Mr. Puneet Khurana to make his opening remarks. Over to you, sir.

Thanks, Mitesh. Good evening, everyone. Thank you for joining us earnings call -- conference call. I will begin by sharing an overview of our performance for the quarter and the year, following which we'll open up the floor for questions. We are pleased to report a healthy performance for FY 2026 marked by improved profitability and margin expansion and continued progress on strategic initiatives. For the full year, consolidated revenue stood at INR 1,470.6 crores. EBITDA increased by INR 15.7 crores year-on-year to INR 203 crores, with margins improving by 210 basis points to 13.8%. Profit before tax stood at INR 159.9 crores, up 22.6% year-on-year, while profit after tax came in at INR 146.7 crores, reflecting the growth of 50.1% -- this performance was supported by favorable product mix, improved realization and our continued focus on operational efficiencies across businesses. For the quarter, consolidated revenue stood at INR 358.2 crores. EBITDA was INR 39.6 crores with a margin at 11.1% compared to with 9% in Q4 FY '25. PAT for the quarter stood at INR 45.7 crores. On a stand-alone basis, revenue for FY 2026 stood at INR 966.7 crores with EBITDA growing INR 53.4 crores to INR 154.4 crores. EBITDA margin expanded to 16% from 10.6% last year. while stand-alone PAT came in at INR 81.2 crores, up 52.3% year-on-year. From the balance sheet perspective, the company remains comfortable position during the year with continued investment in strategic capacity expansion while maintaining financial discipline, giving us the flexibility to pursue growth opportunities in calibrated market manner. The Board has recommended a dividend of INR 0.70 per share for FY 2026. Our Indian business continues to witness strong demand across both CNG and industrial gas application, with industrial applications seeing a healthy increase during the year. We also saw encouraged traction in higher value-added segments such as semiconductor and defense. with contributing positively to our product mix and supported overall margin expansion. The U.S. business maintained steady momentum during the year, supported by healthy order pipeline and growth opportunities in clean energy and specialized industrial applications. We remain focused on strengthening our positions in these markets and addressing emerging opportunities across geographies. During the year, we made meaningful progress on our expansion initiatives. We successfully commenced operations in the greenfield Mundra facility with sending our ability to cater the growth domestic demand. In addition, our Egypt facility is progressing steadily and expected to commence operations shortly. We further enhanced our global manufacturing footprint and improve our ability to serve regional markets more efficiently. From an industry perspective, the broader demand environment remains encouraging for EKC. Although near-term fuel price volatility remains a factor to monitor, CNG continues to witness strong adoption in Indian mobility segment, supported by cost-conscious consumer preference, wider availability, factory-fitted CNG models and steady expansion in city gas distribution infrastructure. As per industry reports, CNG accounts to nearly 22% of passenger vehicle sales in FY '26, emerging as the second largest fuel type in the segment from the second consecutive year and staying ahead of the diesel -- staying ahead of diesel. Over the medium, long term, India is expected to remain a multi-fuel economy with gas playing an important role in mobility and broader energy transition. Beyond CNG-led mobility, opportunity across industrial gas, compressed biogas, hydrogen, semiconductor and defense are expanding with addressable markets for high-pressure gas storage and transportation solutions. With our diversified product portfolio, strong technical capabilities and expanding manufacturing footprint, we believe the company is well placed to participate in long-term opportunities. With this, I conclude my opening remarks and request the moderator to open the floor for questions. Thank you.

[Operator Instructions] Our first question comes from the line of [ Amit Kumar ] with [ Determined Investments ].

So I just wanted to check, again, the Dubai business has sort of continued to be under pressure in the fourth quarter as well. In fact, the whole of last year has been a little bit of a difficult year for that business. Now should we sort of assume that even the coming years, given the geopolitical situation in the Middle East, we sort of -- should we sort of expect any sort of improvement here or things will sort of continue to remain difficult?

And definitely, there will be improvement. We are already -- even in this difficult situation, we are working at around 50%. And the order book is improving. The order book is there. Only thing is that the Middle East situation on shipment and other things are difficult. So hopefully, that this year should be a better year.

And in terms of the India business, the significantly higher cost of LNG, we've sort of heard Petronet that they are still -- I think April, May, they were still operating at barely a 60% utilization rate. So supply is constrained, pricing higher. And now we have started to see CNG prices at the pump also sort of go up. In terms of the India demand scenario, would you have any thoughts going forward?

I think the CNG prices have increased, but they are not increased so much. So the PV market mainly will depend on how the petrol prices move. So if the petrol prices are moving in line with the CNG prices, then if the petrol is going upward and CNG is going slightly upward, definitely, the trend will continue because most of the customers that are using CNG vehicles are basically people who are moving away from petrol because now diesel vehicles really nobody in passenger sector, not many people are even opting for diesel vehicles. They are more opting for a CNG or a petrol vehicle. So customer, I don't think will leave CNG if the prices are still has not moved up so much. The increase is not so substantial. So the things should, I think, continue, at least there should not be much impact on the PV sales.

So actually, just to sort of clarify, if I recall correctly, your commercial vehicle business is bigger than your passenger vehicle business.

Yes, yes.

On the commercial vehicle side, I mean, obviously, last year has been good.

Even on the commercial segment, commercial segment is also continuing.

So from a logistics industry perspective also, I mean, how are you seeing -- I mean, I mean one question is that within the -- I mean, whether the CV demand itself can grow at 7% to 8%.

On the CV demand.

maybe it's got disconnected a little. Okay, I'll answer the question. Yes. So continuing on the point of the CV sales, yes, we do not perceive that the demand may drop. But yes, we are hopeful on that.

[Operator Instructions] Our next question comes from the line of Reet Jain from First Water.

I want to know the order book for the U.S.A. subsidiary under executable time period?

Yes. So the order book in U.S.A. is around USD 75 million and it's for the period between 18 months to 24 months to be executed.

Okay. Got it. And sir, I heard on your results that a new CEO has been proposed. So can you give us the background of the CEO, Mr. Gupta?

Yes. So right now, we are awaiting his joining. Once he joins in, we'll be sharing all the details. So you may wait a little more.

Okay. Got it. And regarding Mundra and Egypt, what is your guidance regarding the ramp-up of the capacity? How soon we will utilize Yes.

On Mundra, we have already started production. So we are sort of -- the ramp-up will happen maybe 6 months down the line because everything needs to stabilize and move ahead. On Egypt, we are -- we may be operational by the end of this month and the ramp-up will start happening again after 6 months.

Okay. Sir, when you say ramp-up, what utilization levels we are targeting?

In India, we may achieve the targets pretty soon. Egypt, we have to sort of -- it will be like immediate targets would be around 40% of our targets. And maybe as we go ahead, we may achieve around 80% of the targets.

Okay. And I can see [ INR 162 crores ] of CWIP in your balance sheet. So what is this regarding?

This is the project which is not capitalized, that is Egypt, U.S.

All those together.

Got it. And sir, any update on the GST case?

Yes. So GST case, we are -- like last time also, in fact, I had indicated that our cases, we have reached out to the government, and we have asked them to give us a clarification on the HSN, which is normally used for our products. So we are very positive on that, and we believe that once the GST Council meeting is held, we may get the clarification and it probably resolve the case.

So is it possible to share any time line regarding the.

Time line can be between 6 months to a year.

[Operator Instructions] We have no further questions at this time, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Yes. Thank you once again for your interest and support. Should you feel any further clarifications or would you like to know more about the company, please feel free to contact our Investor Relations team or CDR India. Thank you.

Thank you. On behalf of Everest Kanto Cylinder Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.