The Hindu Business Line : Everest Kanto under close watch

The Everest Kanto Cylinder stock, which closed at Rs 479.50 on the NSE, is being observed closely for what analysts say are changing dynamics in the market in which the company operates.

EKC, as brokers point out, has seen its PAT growth momentum continue, up 18.7 per cent quarter-on-quarter. Net sales also moved up 25.8 per cent q-o-q. The EBITDA margin, however, has dipped somewhat, a trend being noted in the backdrop of rising raw material prices. The latter is said to be a fallout of increasing costs of seamless steel tubes. Incidentally, the company recorded incremental sales volumes, thanks to its unit at Gandhidham.

The EKC stock is trading at a PE ratio of about 8.9x fiscal 2008 estimated earnings of Rs 54.8. On Friday, it opened at Rs 487 and moved up to Rs 493.95. Over 49,000 shares were traded.

The company's shareholders had recently approved the issue of up to 18.96 lakh equity shares at a premium of Rs 475 and offer for subscription on a preferential basis to Brightwill, a subsidiary of a fund managed by CLSA Private Equity. There is also a plan to sell fixed assets of its Dubai unit to a subsidiary called EKC International. This, brokers feel, should enable EKC to effectively lower the tax rate. The subsidiary is setting up a new unit for cylinders.

Nilanjan Dey

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