Overseas acquisition does not benefit Everest Kanto Cylinder

Everest Kanto Cylinder declined 3.64% to Rs 294.10 at 12:43 IST on BSE despite signing an asset purchase agreement with US-based Reunion Industries to buy all of the assets and liabilities of its vessels division, CP Industries for $64.25 million.

The company made this announcement during trading hours today, 4 March 2008.

On BSE 8,193 shares were traded in the Everest Kanto Cylinder counter. The scrip had an average daily volume of 79,991 shares in the past one quarter.

The stock hit a high of Rs 306 and a low of Rs 290 so far during the day. The stock had a 52-week high of Rs 385.35 on 3 January 2008 and a 52-week low of Rs 144 on 6 March 2007.

The cooking gas cylinder maker had outperformed the market over the past one month till 3 March 2008, declining 1.52% compared to the Sensex’s fall of 8.58%. It had also outperformed the market in the past one quarter, declining 7.89% compared to Sensex’s decline of 14.60%.

The company’s current equity is Rs 20.23 crore. Face value per share is Rs 2.

The current price of Rs 294.10 discounts Q3 December 2007 annualized EPS of Rs 6.24 by a PE multiple of 47.13.

Everest Kanto Cylinder’s subsidiary will acquire the assets of CP Industries. CP Industries, located in McKeesport, Pittsburgh, USA, manufactures and sells large seamless pressure vessels for the containment and transportation of pressurized gases and is a global leader in this business.

Everest Kanto Cylinder’s net profit declined 6.4% to Rs 15.79 crore on 15.2% growth in net sales to Rs 81.57 crore in Q3 December 2007 over Q3 December 2006.

The company is engaged in manufacturing high-pressure gas cylinders with the higher water capacity.