Gujarat State Petronet Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Gujarat State Petronet (GSPL) reported its Q2FY17 result, which were above our estimates on the profitability front. GSPL reported 2.1% YoY growth in revenues at | 258 crore, below our estimate of | 268.5 crore. While gas transmission volumes increased 1.3% YoY to 24.6 mmscmd (our estimate: 25.6 mmscmd), realisation remained flat YoY at | 1.1/scm (our estimate: | 1.1/scm) EBITDA stayed flat YoY at | 226.2 crore, marginally below our...

GSPL's Q2FY17 result came as a mixed bag were revenue and EBITDA was below our expectation on the back of lower than expected volume and higher than expected other expenses while PAT was above expectation propelled by higher than expected other income. The company's revenue increased 2.1% YoY to Rs2,580 mn due to higher volume and realization both. Volume came at 24.6mmscmd against 24.3/25.1mmscmd in YoY/QoQ (IDBIest 25.1mmscmd). Average realisation was up marginally 1% YoY to Rs1.08/scm. The company's O&M; expenses increased to 6.8% of sales in Q2FY17 from 4.8% in Q2FY16 (4.5% in Q1FY17). Consequently, EBITDA was flattish YoY to Rs2.3 bn (IDBIest Rs2.4 bn). However, due to 139% higher other income and 31% drop in interest...

Gujarat State Petronet (GSPL) reported its Q1FY17 result, which were above our estimates. GSPL reported flat YoY growth in revenue to | 258.1 crore, above our estimate of | 247.6 crore. While gas transmission volumes increased 4% YoY to 25.1 mmscmd (I-direct estimate: 25.3 mmscmd), the realisation declined 4.7% YoY to | 1.1/scm (I-direct estimate: | 1/scm) . EBITDA increased 2.7% YoY at | 233.3 crore, above our estimate of | 212.6 crore, mainly due to lower-than-expected operational and maintenance expenses. Subsequently, PAT in the quarter increased 7.5% YoY to | 121.3 crore, above our estimate of | 103.1 crore.

Valuation : GSPL’s transmission business is expected to report steady volume growth in the backdrop of falling LNG prices due to lowering of gas prices and renegotiated LNG supplier contracts. Higher growth in domestic power demand due to favourable reforms, increased LNG capacity and lower gas prices would also add to incremental volumes, going forward. An upward revision of transmission tariffs by PNGRB in coming months would be a key positive for the stock. GSPL’s investments in CGD entities such as Gujarat Gas (25.8% stake) and Sabarmati Gas (27.5%) would also create value for investors in future. We value GSPL’s investments at | 34 per share. Subsequently, we have valued GSPL based on an SOTP basis and arrived at a price target of | 170.

EBITDA above estimate led by lower opex; volumes subdued Gujarat State Petronet’s (GUJS) EBITDA rose 4% YoY (+14% QoQ) to INR2.3b (est. of INR2.1b), benefiting from (a) a 39% YoY decline (-10% QoQ) in opex to INR117m (est. of INR173m), partly led by SUG gain and (b) higher-than-expected windpower revenues of INR144m (+21% YoY). PAT increased 8% YoY (+22% QoQ) to INR1.2b (est. of INR1.1b).

Valuation and view: Motilal Oswal model (a) transmission tariff at INR1,129/mscm in FY17 and 1,200/mscm in FY18 v/s actual 1,073/mscm in 1QFY17 and (b) volumes at 27/28mmscmd in FY17/FY18 v/s actual 25.1mmscmd in 1QFY17. Medium-term risk is some volumes (~5mmscmd) going away with the start of RIL’s petcoke gasification project. For every 5% variation in volumes/tariff, earnings change by ~6%. The stock trades at 14.4x FY18E adj. EPS of INR10.9. Their SOTP-based target price stands at INR158. Neutral

ICICI Securities Ltd | Retail Equity Research Gujarat State Petronet (GSPL) reported its Q4FY16 results, which were below our estimates on the revenue front. GSPL reported a...

8 Gas transmission volumes fell 3% qoq to 24.4mmscmd in Q4 4% lower than our estimateof25.5mmscmd.Volumeswereup8%yoy 8 DeclineinthroughputqoqwasduetolowerONGCsuppliesonaccountofoutages...

stood at INR4.4b higher YoY due to higher other income and lower tax rate. Volumes increase below estimates, tariff lower 4QFY16 transmission volumes stood at 24.4mmscmd (est. 25.6mmscmd; +8%...

PNGRB raised GAIL (India)'s (Not rated) KG Basin pipeline tariff by 8x to Rs 45.31/mmbtu (final)fromRs5.56/mmbtu(provisional).KGnetworkisthefirstofGAIL'ssixpipelinesunder tariffreviewfollowingAPTEL'sordertoPNGRBforrevisitingtariffassumptions.PNGRBalso...

9 Other income was 2.6x our estimate (due to Gujarat Gas' dividend of Rs 5/share amountingtoRs177mn)leadingtohigherthanestimatedPAT 9 Effectivetaxratewasalsolowerat28%duetodividendincome...