1. At a Glance
Everest Kanto Cylinder Ltd (EKC) — the name itself sounds like a hill you must climb with a gas cylinder on your back. The company, once the golden boy of India’s CNG revolution, now looks more like that uncle who peaked in 2012 and is still telling everyone he “almost” invested in Tesla. With amarket cap of ₹1,390 crore,stock price of ₹124, andP/E of 14.2, EKC’s latest Q2 FY26 results show arevenue of ₹360 croreandPAT of ₹13.7 crore— a 46% YoY drop that hits harder than a gas cylinder falling on your toe.
Return on capital employed? 11.8%. Return on equity? 8.9%. Return on investor patience? Let’s just say not measurable. Despite its presence in 25+ countries, the company’s stock is down40.5% in one year. Yes, you read that right — the same firm supplying cylinders to Reliance and Tata Motors somehow managed to leak shareholder value faster than a faulty valve.
But wait — there’s expansion in Egypt, a big Mundra project, and talk of hydrogen and biogas opportunities. So is EKC the sleeping gas giant of India or just another fume in the CNG story? Buckle up; this one’s going to be explosive.
2. Introduction
Once upon a time, before electric cars became the cool kid, Everest Kanto Cylinder was the oxygen tank of India’s CNG story. If you ever sat in an old CNG auto that sounded like it was crying for help, chances are, the cylinder behind your seat was made by EKC.
Established in 1978 and still holding strong, EKC is the OG of high-pressure seamless gas cylinders. It has20 million+ cylinders in service, supplying to every possible segment — from autos to industries to hospitals to, well, your neighborhood fire extinguisher. It’s Asia’s largest manufacturer of these steel beasts.
Yet, behind the metal is a story of pressure — both literally and financially. Once flying high with booming CNG adoption and city gas expansions, EKC today finds itself juggling between slow domestic demand and expansion dreams abroad. The Egypt facility is nearing completion, Mundra expansion is on, and management keeps promising a ₹300 crore revenue boost.
But here’s the fun part — their Q2 FY26 numbers look like the company took a nap right when the EV boys started their engines. Revenue fell slightly QoQ and profits nosedived. The only thing that inflated more than their cylinders? The competition in clean energy.
So, what’s really happening under EKC’s heavy metal hood? Let’s roll up our sleeves and find out.
3. Business Model – WTF Do They Even Do?
Think of EKC as the guy who sells the bottles that hold everyone else’s energy. It doesn’t produce gas; it produces the containers that keep the gas from blowing up your factory.
Core Business:
- CNG Steel Cylinders:For autos, buses, and city gas distribution.
- Industrial Gas Cylinders:For factories that smell like burnt oil and ambition.
- Medical Cylinders:The pandemic hero product — oxygen cylinders.
- Hydrogen & Jumbo Cylinders:Future-ready segments aiming to ride the green wave.
Theircustomers include Tata Motors, Bajaj Auto, Mahindra, HPCL, IOCL, Torrent Gas, and Adani Gas— basically, anyone who can spell “gas”.
Geography check:
- India: 63.5%
- USA & Hungary: 25.1%
- UAE: 11.4%
So it’s not just desi gas — they’re bottling air for the world.
Theirmanufacturing plantsare spread across India (Tarapur, Kandla SEZ) and abroad (Dubai, USA, soon Egypt). With capacity utilization around 70%, the company isn’t exactly maxed out but claims growth potential through hydrogen, biogas, and the much-hyped Egypt expansion.
In short, they make cylinders so others can make money. But when demand slows, EKC’s numbers deflate faster than a politician’s promise after elections.
4. Financials Overview
| Metric | Q2 FY26 | Q2 FY25 | Q1 FY26 | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 360.4 | 367.0 | 387.0 | -1.8% | -6.9% |
| EBITDA (₹ Cr) | 42.9 | 53.0 | 61.0 | -19.1% | -29.7% |
| PAT (₹ Cr) | 13.7 | 25.5 | 52.0 | -46.2% | -73.6% |
| EPS (₹) | 1.22 | 2.35 | 4.60 | -48.1% | -73.5% |
So yes —revenue slipped slightly, but profit fell off a cliff. EBITDA margin shrank to 12%
and PAT margin to a barely-there 3.8%. The company blamed it on timing mismatches and forex fluctuations, but it looks more like an operating slowdown.
If this trend continues, investors may need medical cylinders — not for COVID, but for stress relief.
5. Valuation Discussion – Fair Value Range Only
Let’s keep this fair and educational (and funny).
a) P/E Method:EPS (TTM): ₹8.62Industry P/E: 34.8Company P/E: 14.2
If EKC catches up halfway to the industry median (say 20–25x):
- Fair value range = 8.62 × (20 to 25) =₹172 to ₹215
b) EV/EBITDA Method:EV = ₹1,516 CrEBITDA (TTM) = ₹182 CrEV/EBITDA = 8.3x
Peer median = 12–15x.If rerated:Fair value = (182 × 12–15) = ₹2,184–₹2,730 Cr EV.Per share = around₹180–₹225.
c) DCF Method (simplified):Assume revenue grows at 10%, margins at 11–12%, discount 12%.Fair range ~₹170–₹210.
So overall, theeducational fair value range = ₹170–₹215.
Disclaimer:This fair value range is for educational purposes only and is not investment advice.
6. What’s Cooking – News, Triggers, Drama
Q2 FY26 was a mixed thali — some sweet announcements, some bitter regulatory chaat.
- Dubai Branch Closed:Management decided to wrap it up — probably realized Dubai rents are tougher than Indian tax laws.
- Egypt Plant:Commercial production beginsJuly 2025, expected ₹200 Cr revenue. They’ve raised₹95 Cr from Bank of Egypt. The building’s done; machines are on the way.
- Mundra Expansion:₹50 Cr capex approved for new lines; full capacity can add ₹300 Cr revenue.
- Reliance Biogas Opportunity:With Reliance’s ₹65,000 Cr biogas investment, EKC is already a vendor. Cue the green drumroll.
- Penalty Alert:KASEZ slapped EKC with₹11.29 Cr finefor NFE shortfall — a bureaucratic equivalent of “no homework done, fine ₹10 crore.”
- Credit Rating Upgrade:CARE upgraded EKC toA-/A2+, signalling at least someone believes in them.
So yes, drama is alive. Between Egypt’s deserts and Reliance’s biogas dreams, EKC might just light its next spark
