MOSL: GUJARAT GAS (Buy)-Record EBITDA/scm drives beat to our estimates
Gujarat Gas: Record EBITDA/scm drives beat to our estimates
(GUJGA IN, Mkt Cap USD1.2b, CMP INR124, TP INR162, 31% Upside, Buy)
- GUJGA reported significantly higher EBIDTA of INR3.2b (v/s INR2b a year ago, more than double QoQ) as against our estimate of INR1.8b. PAT came in at INR1.4b (v/s our estimate of INR576m; doubled YoY), primarily due to lower raw material cost.
- EBITDA/scm increased to INR5.3 (v/s our estimate of INR2.9, INR2.6 in 2QFY19), however, the street has reservations about sustainability of EBIDTA/scm above INR5. We model EBITDA/scm of INR3.9/4.0 for FY20/21.
- Sustained Volume Growth: PNG industrial/commercial volumes stood at 4.6mmscmd (+2% YoY, -3% QoQ), while PNG household volumes were at 0.5mmscmd (+4% YoY, +2% QoQ). We have modeled PNG volumes at 5.6/6.2mmscmd for FY20/21.
- CNG volumes up 10% YoY: CNG volumes stood at 1.4mmscmd (+10% YoY, +2% QoQ). We have modeled CNG volumes at 1.5/1.7mmscmd for FY20/21.
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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