Everest Kanto gains as PE fund buys stake at premium

Everest Kanto gains as PE fund buys stake at premium. Everest Kanto Cylinder was up 1.71%, to Rs 470.20, after the gas cylinder maker's board approved selling 1.896 million shares to a private entity, at Rs 485 a share.

The issue to Brightwell, the unit og CLSA Private Equity Management, will bring in Rs 92 crore, and account for 9.72% of the enhanced share capital.

With the current market price of Rs 470.20, the shares were sold to Brighwell for a premium of Rs 14.80.

The stock has risen sharply from a low of Rs 277.40 on 25 July, to Rs 462.30, by 21 September 2006.

At the current market price of Rs 470.20, Everest Kanto Cylinder trades at 18.07 times its Q1 June 2006 annualized EPS of Rs 26.02.

In May, the company board decided to form a wholly-owned subsidiary in China to manufacture high pressure gas cylinders, and all other allied products with an investment amounting to $ 50 million in the first phase. The company was to raise the money through FCCBs/GDRs/private placement.

In March, Everest Kanto Cylinder established a wholly-owned subsidiary in Dubai, which will be functional by August this year. The plant is located in Jebel Ali free zone and was built at a total investment of $ 8.5 million spread across 20,000 sq mt. With the new plant in place, the capacity at Dubai will be doubled from 1 lakh to 2 lakh cylinders. The company already has a plant in Dubai.

Everest Kanto is also a major exporter of CNG cylinders to Thailand, Malaysia, Bangladesh, Iran, Pakistan and neighbouring Middle East countries.

The company currently has units at Tarapur, Gandhidham, Dubai and Aurangabad, with an aggregate capacity of 7.06 lakh units per annum.

Everest Kanto Cylinders is a major player in high pressure seamless steel gas cylinder industry. High pressure gas cylinders are used in storage of medical gases, compressed natural gas (CNG) for vehicles, fire-fighting gases, industrial applications like welding, beverage industry, defense and space applications.

Everest Kanto Cylinder registered a net profit growth of 119%, to Rs 11.46 crore for Q1 June 2006, compared to Rs 5.22 crore in Q1 June 2005. Net sales during the period increased from Rs 40.26 crore to Rs 79.56 crore.