Gujarat State Petronet Ltd. share price target

We are keeping our estimates for FY18 almost unchanged and introducing financials for FY19. We expect its volume to increase to 27/26.3mmscmd in FY18/FY19 from 24.9mmscmd in FY17. We expect its volume to dip in FY19 owing to commencement of RIL's petcoke...

ICICI Securities Ltd | Retail Equity Research Gujarat State Petronet (GSPL) reported its Q4FY17 results, which were below our estimates on the operational front. Revenues increased 5.5% YoY to | 244.6 crore below our estimate of | 267.9 crore, mainly on account of lower than estimated volumes Gas transmission volumes declined 5.3% YoY to 23.4 mmscmd (our estimate: 26.4 mmscmd). However, realisations increased 16.4% YoY to | 1.2/scm, above our estimate of | 1.1/scm...

GUJARAT STATE PETRONET: Tariff hike expected: To address industry's concerns, PNGRB (gas regulator) has initiated public consultation process to amend tariff calculation methodology.

Gas transmission volume should grow by a CAGR of 8.3% in FY17-19 to 30.6mmscmd. Majority of the incremental volume is expected to come from 1) Pick up in ceramic volumes on addition of new vitrified tiles capacity 2) Rising CGD penetration in Gujarat 3) Demand from refining industry on favorable LNG prices versus alternative fuels & 4) Expansion in LNG terminals like Dahej and Mundra. Clarity on long awaited transmission tariff is expected in a couple of months due to the recent addition of new members on the board of PNGRB which would now help to form a quorum needed to take decisions....

Revenue grew by 2.47% to Rs. 262.7 Cr in Q3FY17 when compared to the previous quarter. Also, it increased by 6.14% when compared with Q3FY16

Despite cash crunch in wake of demonetization, GSPL's gas volumes rose strong 6.6% QoQ to 26.2 mmscmdin Q3FY17 on robust demand from all sectors (power, fertilizer, CGD and industrials). Tariff was flat QoQ at Rs 1.09/mscm. Opexfor 9MFY17 declined ~12% YoY due to lower internal consumption of...

Volume Surprise in the Quarter; Tariff Revision Awaited: Basic Custom Duty reduced on LNG - In order to encourage usage of naturalgas and make India essentially a gas based economy, the government took another step in this direction. In its budget 2017-18, the government has reducedthe basic custom duty on LNG to 2.5% from 5%. The reduction will make LNG more competitive to alternate fuels and thus increase its demand in the country.We expect GSPL will be able to transport more volumes going forward and will positively contribute to its earnings.

We are keeping our volume estimates unchanged at 25.5/28mmscmd in FY17/FY18. We are keeping our target price unchanged at Rs150 (valuing core business at Rs122 and its 26% stake in Gujarat Gas at Rs28). Maintain HOLD. Result Highlights and Investment Rationale Higher than expected volume led to 7.5% revenue growth The company's revenue increased 7.5% YoY to Rs2,668 mn due to higher volume and realization both. Volume came at 26.2mmscmd against 25.1/24.6mmscmd in YoY/QoQ...

Poised for Growth in Changing Industrial Dynamics: Increasing availability of natural gas in Gujarat - In October 2016, theadditional 5 MMTPA capacity of Petronet LNG became operational at its Dahej terminal. The company plans to further augment the capacity to 17.5 MMT by2019E. With the expanded capacity of all terminals taken together, Gujarat will have highest LNG capacity in the country. GSPL procures ~ 2.25 MMT from PetronetLNG. Considering the new supplies of natural gas from other sources including Petronet LNG, GSPL is expected to post higher volumes going forward.

GSPL's Q2 PAT at Rs 1.3 bn was higher than our estimate of Rs 1.1 bn,as dividend income of ~Rs 90 mn from Gujarat Gas (GGAS) propped other income.