MOSL: GUJARAT GAS (Buy)-Beat on margins, strong performance to continue
GUJARAT GAS: Beat on margins, strong performance to continue
(GUJGA IN, Mkt Cap USD2.9b, CMP INR296, TP INR340, 15% Upside, Buy)
- Reported EBITDA marginally exceeded our estimate (by 5%) owing to higher-than-expected EBITDA/scm of INR4.3. Volumes were in line with our estimate at 9.2mmscmd.
- The National Green Tribunal has mandated penalty against the Pollution Control Boards that do not comply with its Nov’19 order of curbing pollution in critically and severely polluted industrial clusters across India.
- We have already noted that the NGT order did pan out strongly at Morbi, and any such order could further benefit GUJGA, industrial being its largest segment.
Beat led by better margin
- Reported EBITDA was at INR3.7b (+15% YoY; our estimate: INR3.5b) with PBT at INR2.6b. Reduced interest cost was offset by lower other income.
- PAT stood at INR2.0b (our estimate: INR1.9b; +30% YoY, -62% QoQ – as the company took DTL benefit in 2QFY20).
- For 9MFY20, EBITDA was up 65% YoY at INR12.1b, supported by the NGT ban at Morbi volumes from 1QFY20. PBT doubled to INR8.8b (v/s INR4.4b YoY), while PAT stood at INR9.5b (v/s INR3.1b YoY).
- EBITDA/scm stood at INR4.3 versus our estimate of INR4.0 and INR5.3 in 3QFY19. EBITDA/scm has normalized at current levels after coming in highest ever at INR5.6 in 1QFY20.
Gujarat Gas Ltd Formerly known as Gujarat Gas Company Limited. Gujarat Gas Company Limited is an India-based company. The Company is engaged in Natural Gas Business in Gujarat. Natural gas business involves distribution of gas from sources of supply to centers of demand and to the end customers. The Company has underground pipe lines consists of mild steel (ME) and polyethylene (PE). These lines gas is supplied to Residential, Industrial, Commercial and Compressed Natural Gas (CNG). The Company also supplies piped natural gas to customers and retails compressed natural gas. Gas is used by customers for applications, such as heating, cooling, power and process. The Company has two subsidiaries namely Gujarat Gas Financial Services Limited and Gujaratgas Trading Company Limited.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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