Whalesbook
Everest Kanto Cylinder Posts Stellar Profit Growth Amid Expansion Drive
Mumbai, India - Everest Kanto Cylinder Limited (EKC) has reported a significant jump in its net profit for the third quarter of FY26, showcasing robust profitability despite a marginal dip in revenue. The company's strong performance was driven by improved realisations and cost discipline, even as it pushes ahead with ambitious expansion plans in India, the US, and Egypt.
Financial Performance Highlights
In Q3 FY26, EKC's consolidated revenue stood at Rs. 365.1 crore, a slight decrease of 0.5% compared to the same period last year. However, the company's profitability surged. Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) more than doubled, rising by 48.4% year-on-year (YoY) to Rs. 59.2 crore. This translated into a significant expansion of the EBITDA margin, which jumped to 16.2% from 10.9% in Q3 FY25, marking a substantial improvement of 534 basis points.
The company's Profit After Tax (PAT) mirrored this strong trend, surging by 98.9% YoY to Rs. 35.7 crore. Earnings Per Share (EPS) Diluted also saw a near doubling, reaching Rs. 3.18, up 97.5% YoY. On a standalone basis, revenues grew 1.1% YoY to Rs. 247.0 crore, with EBITDA jumping 56.2% YoY to Rs. 57.0 crore and EBITDA margins expanding significantly to 23.1%.
For the first nine months of FY26 (9M FY26), consolidated revenues grew 3.3% YoY to Rs. 1,112.4 crore, while EBITDA rose 21.5% YoY to Rs. 163.4 crore. PAT for the nine-month period increased by 19.5% YoY to Rs. 101.0 crore.
Strategic Expansion and Investments
EKC is actively investing in expanding its manufacturing capabilities across key geographies. One production line at its new greenfield facility in Mundra, Gujarat, is now operational, with two more lines expected to be commissioned in the coming months. An additional capital expenditure (capex) of Rs. 30 crore has been approved for this facility.
Furthermore, the company is making a significant investment of USD 5.50 million in its wholly-owned US subsidiary. This capex is aimed at enhancing manufacturing capacity for larger diameter and Type 4 cylinders, catering to evolving market needs. The Egypt facility is also on track and slated to commence operations by May 2026, targeting domestic and regional markets.
Financial Deep Dive and Balance Sheet
The improved profitability in Q3 FY26 was largely attributed to a favourable product mix and better realisations, alongside stringent cost management. While shareholder funds increased to Rs. 1,206.4 crore as of March 2025 from Rs. 1,100.2 crore in March 2024, indicating retained earnings, the company's debt levels have also seen an increase. Long-Term Debt stood at Rs. 52.0 crore and Short-Term Debt at Rs. 116.4 crore as of March 2025. However, reports suggest EKC maintains a lean debt profile with a debt-to-equity ratio of around 0.12 as of March 2025, indicating manageable leverage [4, 9].
Risks and Outlook
While the profit surge and expansion plans paint a positive picture, investors should note certain factors. Historical data reveals that EKC has faced challenges with revenue growth and profit margins in the past, with significant margin volatility reported across quarters [8, 13]. The company also faced a penalty of ₹11.29 crores in October 2025 from the Development Commissioner for not achieving cumulative positive Net Foreign Exchange over a five-year period, for which it complied by paying the penalty [16]. A significant regulatory action in January 2025 involved a GST demand of over ₹126 crore due to classification disputes, which the company plans to appeal [20].
Historically, EKC faced serious allegations of fraud and fund siphoning in 2018, leading to a forensic audit by its lenders [18, 19]. While the current results do not indicate any ongoing fraud, this historical event warrants attention regarding governance scrutiny.
The company's outlook appears optimistic, driven by its strategic capacity expansions. The growing demand for industrial gases and cylinders, fuelled by India's industrialisation, infrastructure development, and the push towards clean energy sources like hydrogen, provides a favourable backdrop for EKC [14, 21, 22, 23, 24].
Peer Comparison
Everest Kanto Cylinder operates in a competitive landscape that includes players like Inox India Ltd. and other industrial gas suppliers and manufacturers. While Inox India is a significant player in cryogenic tanks and industrial gas equipment, EKC focuses on high-pressure seamless gas cylinders. Historically, EKC has shown periods of robust profit growth, but also faced challenges with revenue stagnation and margin volatility compared to some peers [5, 10, 11, 13]. The current expansion drive is aimed at solidifying its market position amidst growing demand for gas storage solutions.