Top takeaways from Q1FY17 : Gas sales volume fell 5% qoq to 5.14mmscmd (6% below our estimate of 5.50mmscmd) due to seasonal dip in domestic PNG volumes. Gross margin rose 3% qoq to Rs 7.0/scm (in line) due to decline in raw material gas price while clean EBITDA/scm increased 9% qoq to Rs 4.5 on 8% fall in opex/scm to Rs 2.5 9 Interest declined 11% qoq to Rs 534mn; ETR normalised at 30.1%; Net debt of Rs 22.8bn 8 PAT was up 30% yoy and 10% qoq at Rs 759mn, but 16% below our tax adjusted estimate due to lower than expected volumes. OCI was Rs 40mn loss in Q1FY17.

Outlook and valuation: They maintain positive view on GGL due to expected traction in existing markets like Morbi from 2HFY17 onwards. Longer term outlook is attractive with economic/industrial revival and development in new areas. We cut our FY17 EPS by 6% but raise our longer term estimates.Also lower WACC in DCF and hence revise their target price to Rs 700 (Rs 600 earlier). Maintain Buy