Seamless Cylinders – ‘The CNG Drive’ (INDIA INFOLINE)

Environmental benefits: a key driver for CNG demand growth
Robust economic growth, at a global cycle, over the last few years, has lead to a strong growth in primary energy consumption. With lack of availability of technology to tap renewable resources, consumption of fossil fuels has gathered significant momentum. Contribution of coal and crude oil to global primary energy basket stands at 64%.

Emerging economies: demand growth centres
Majority of the growth in natural gas vehicles (NGVs) has been driven by emerging economies. Most of these economies have subsidized petrol and diesel pricing, which has led to sustenance of CNG's cost advantage in the current fall in crude oil prices. With energy security being at the top of mind for many of these economies, shifting to CNG would be a key strategy.

Everest Kanto Cylinders: A global growth story
With EKC setting up footprints in Dubail, China and Kandle SEZ (India), it is well poised to serve economies witnessing robust growth for CNG cylinders. Its total capacity is slated to increase from the current 1mn cylinders to 1.5mn cylinders in FY10. We believe current valuations do not factor EKC's future growth prospects adequately, Recomment BUY.

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