Gujarat Gas Ltd. share price target

Gujarat Gas announced its Q2FY17 results, which came in lower than our estimates. The topline increased marginally QoQ to | 1237.1 crore in Q2FY17 but came in lower than our estimate of | 1308.7 crore, mainly due to lower than estimated sales volumes Gross margins declined marginally by 2.1% QoQ to | 6.9/scm against our expectation of | 7/scm. Volumes increased marginally QoQ to 5.2 mmscm but below our estimate of 5.4 mmscmd. Subsequently, EBITDA came in at | 212.8 crore, below our estimate of | 248.6 crore...

Gujarat Gas Ltd. (GGL), with the largest addressable area in one of 28,179 the leading industrialized states, offers a compelling investment 8,709 opportunity in the City Gas Distribution (CGD) business. We expect...

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 

Gujarat Gas announced its Q1FY17 result, which came in lower than our estimates. Revenues declined 11.1% QoQ to | 1224.8 crore in Q1FY17 (our estimate: |1306.6 crore) mainly due to lower gas costs • Gross margins increased 2.6% QoQ to | 7/scm vs. our expectation of | 6.7/scm. However, volumes declined 5.1% QoQ to 5.1 mmscmd mainly due to lower domestic PNG volumes and came in below our estimate of 5.4 mmscmd. Subsequently, EBITDA came in at | 219 crore, below our estimate of | 232.4 crore • PAT increased 30.7% QoQ during the quarter to | 75.9 crore but came in below our estimate of | 84.9 crore.

Outlook & Valuation : Gujarat Gas has been rapidly expanding its reach in Gujarat by way of securing licences to expand its CGD network across five new areas, making it to a total of 19 districts of Gujarat, Dadra and Nagar Haveli, Thane and Palghar in Maharashtra. With its expanding presence across several districts in Gujarat and falling LNG and APM gas prices, Gujarat Gas stands to benefit in future from volume growth and margins expansion. We believe the company’s strong CGD network offers good demand potential due to lower CNG and residential PNG penetration and increased usage of natural gas for industrial volumes. However, we believe the stock is fairly valued at current market price and recommend HOLD on the stock. We value Gujarat gas based on the DCF methodology to arrive at a target price of | 615 (WACC – 12%, terminal growth – 3%)

both totalling ~1.5mmscmd. For full year FY16, volumes were down 14% at 5.6mmscmd whileEBITDA/scmfell23%toRs3.4.AdjustedEBITDA/PATfell33%/59%yoytoRs7.4/1.8bn (reportedPATRs1.5bn)whichimpliesanEPSofRs13.1.GrossdebtasonMarch2016end...

ICICI Securities Ltd | Retail Equity Research Gujarat Gas reported its Q4FY16 results, which were above our estimates. Revenues declined 7.2% QoQ to | 1378.1 crore but were...

Gujarat Gas Company Ltd (GGCL), a subsidiary of GSPC Distribution Networks (GDNL), is India's largest private sector player in the natural gas transmission and distribution business....