I would like to add my views on the results and promoters. Please give your views.
Results were down clearly due to CNG vehicles (pointed out by many on this forum). My understanding is (after talking to a few users) while CNG is still cheaper the differential has come down a lot and may even become more expensive if gas prices are going up so they have put purchase of CNG vehicles on hold and will see how prices move - so naturally sales will decline. But once prices come down because parity has to come in petrol/ diesel and CNG prices (LPG prices will bridge the gap over time) sales of CNG vehicles will pick up.
Demand from CGD has been robust, but EKC has not been able to fully capatalise on it. Companies like Rama cylinders are selling a lot to CGD players. Today itself i saw many trucks of Mahanagar gas with CNG cascades from Rama cylinders near Panvel (Mumbai). Company has been running on full capacity so they havent really bothered (pl listen to the previous concalls and you will realise this).
- Honestly I think promoters are trying to disclose whatever they can. The issue is not intention, but that they are very poor at forecasting or even having a good pulse on the market. the company has been lucky that CGD / CNG demand has multiplied over the past few years and they are making money. Any other company looking at the demand surge would have planned for expansion much before. promoters they say they are being conservative in the projections - the truth is they dont have much clue. they are just going with the flow - and the flow is very very good !! Demand will rebound and company will be back to full utilisation but had the company been more vigilant this dip in sales wouldnt have happened.
Another example is composite cylinders, they have the technology in the US subsidiary and the demand in US is large. they could have used that tech for US and India markets. They could have exported from India to US and other mkts. In the many concalls they have totally discounted composites. only in the last call they acknowledged that they will look at it - that too when a investor insisted. Please have a look at results of Time Technoplast and the performance of composite cylinders.
Lastly on the large volumes of shares traded over the past month. While share price has come down a lot - someone is buying in large quantities - about1 crs shares has been traded as Delivery. even if we remove 50% as trading volumes - it is still large. it is close to 20% of free float which is very high for any company in a such a short period.
All in all - sales dip is only temporary and volumes and profits will be back, hope the promoters become more proactive at business and get better people to run the company. Even if they dont do it the valuation is still compelling.
Happy investing !!
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