Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated revenue for Q1 FY25 reached INR343 crores, reflecting a year-on-year increase of 28%.
- EBITDA for Q1 FY25 was INR41 crores with a margin of 12%, indicating strong operational performance.
- The company is expanding its manufacturing capabilities with new facilities in Egypt and Mundra, India, expected to be operational by the end of the fiscal year.
- The launch of the world's first CNG motorcycle in India presents a significant growth opportunity in the two-wheeler market.
- The company remains debt-free on a standalone basis, with only working capital debt of $5 million.
Negative Points
- Margins have been lower compared to the previous quarter due to changes in product mix and market conditions.
- The commercial segment experienced a difficult period, impacting overall growth and margins.
- The electric vehicle market poses a competitive threat to the CNG segment, although infrastructure development for EVs is still in progress.
- Revenue growth guidance for the full year is conservative at 15-20%, despite a strong Q1 performance.
- The US business is project-based, leading to potential variability in order execution and revenue recognition.
Q & A Highlights
Highlights of Everest Kanto Cylinder Ltd (BOM:532684, Financial) Q1 FY25 Earnings Call
Q: How do you see the outlook for the CNG vehicle industry over the next nine months and FY26?
A: The CNG price increase impacted the commercial segment's growth, but the market is now growing even at higher CNG prices. The industry is sustainable and fresh purchases have resumed. We expect continued growth in the CNG vehicle industry. (Puneet Khurana, Managing Director)
Q: What is your take on the penetration of electric vehicles in the commercial vehicle segment compared to CNG vehicles?
A: Electric vehicles are growing but the infrastructure and cost challenges mean CNG will still have a significant future in India for at least the next 15 years. (Puneet Khurana, Managing Director)
Q: Can you provide a forecast for full-year revenue growth and EBITDA margin?
A: We expect revenue growth of 15% to 20% for the full year. EBITDA margins should improve as the business grows. (Puneet Khurana, Managing Director)
Q: What are the qualitative changes the company has seen over the last few months or quarters?
A: The commercial segment is picking up, and we are working on breakthroughs in the passenger segment. The industrial segment and cascade business are promising, and the new two-wheeler vertical is exciting. (Puneet Khurana, Managing Director)
Q: What is the expectation for the US business for this financial year based on current visibility?
A: The US business has a strong order book from clients like SpaceX, NASA, and the US Navy. We expect consistent performance, with quarterly revenues around INR70-80 crores. (Puneet Khurana, Managing Director)
Q: How are CNG stations growing in India?
A: CNG stations are growing consistently, with around 300-400 new stations being built each year. India remains the largest CNG market in the world. (Puneet Khurana, Managing Director)
Q: What is the current debt and cash position on the balance sheet?
A: On a standalone basis, there is no debt except for working capital of $5 million. The cash position is around INR50 crores. (Puneet Khurana, Managing Director)
Q: What is the spare capacity and future capacity expansion plans?
A: We have around 30% spare capacity. Future capacity expansion will depend on market conditions and utilization rates. (Puneet Khurana, Managing Director)
Q: Are you the sole supplier to Bajaj for the new CNG two-wheeler?
A: It is too early to say. The vehicle has just been launched, and we are awaiting market response before determining our share of the business. (Puneet Khurana, Managing Director)
Q: What are the CapEx plans for the new facilities in Egypt and Mundra?
A: The Egypt facility will have a CapEx of INR150 crores and a capacity of 200,000 units per annum, expected to be operational by June 2025. The Mundra facility will have a CapEx of INR100 crores and a similar capacity, expected to be operational by March 2025. (Puneet Khurana, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
