It seems very few people attend EKC investor calls.
In short some key points:
- Sales should be maintained at these levels – based on demand from industrial segment, and destocking of CNG vehicles and hence new orders as some sales of CNG vehicles will happen.
- Margins could increase on account of fixed cost reduction and reduction in steel prices.
- US and Dubai subs will do much better as demand has picked up.
My take – If the above happen then the annual EPS should be around 8 to 10 based on which the price should be 100-125.
Mr. Khurana also mentioned – If the international prices of LNG come down then demand of CNG vehicles will pick up which will increase the utilisation of plants from current 50% and increase in sales and margins.
My take – LNG prices have already come down a lot but still much higher than last year. LNG prices will correct further as and when supply increases (from countries apart from Russia) and when more transport vessels are available (price increase is also due to shortage of vessels) once Europe is done with stocking for winters. Alternate sources of energy like coal, biomass/ wood, etc will also reduce burden on gas.
So it is just a matter of time that demand will pick up again and the gas story will be back. but till then it is just wait and watch.
Overseas expansion:
Hungary JV is on hold due to Russia Ukraine conflict and high gas prices.
Egypt is going ahead but regulatory approvals are awaited.
Not much investment has been made in these JVs.
Promoter loans:
One of the investors pointed out that all of the negative things are external and nothing can be done by the company. But paying off the promoter loans is within the control of the management !! so why not use the cash and reduce the interest burden.
This was a very valid point. lets see what the company does.
Disclaimer – All of above is personal opinion and not construed as advice.
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