MOSL: GUJARAT STATE PETRONET (Buy)-Higher other expenditure comes in as a dampener
Gujarat State Petronet: Higher other expenditure comes in as a dampener
(GUJS IN, Mkt Cap USD1.3b, CMP INR167, TP INR209, 25% Upside, Buy)
Transmission volumes of 34.5mmscmd were higher than our estimate of 33mmscmd. Implied tariff was marginally lower at INR1,420/mscm. Driven by higher other expenditure of INR804m (+90% YoY, +31% QoQ), EBITDA came in lower than our estimate at INR3.5b (+19% YoY, -32% QoQ). 2QFY19 included the retrospective impact of tariff revision from 1QFY19. PAT in the quarter came in at INR1.7b (-4% YoY, -46% QoQ; our estimate: INR2.3b).
Transmission volumes at 34.5mmscmd
- Transmission volume stood at 34.5mmscmd, as against 33.5mmscmd in 3QFY18 and 35mmscmd in 2QFY19.
- Implied transmission tariff stood at INR1,420/mscm, as against INR1,123/mscm in 3QFY18 and INR1,810/mscm in 2QFY19. Implied tariff in 2QFY19 included the retrospective impact of tariff hike.
Valuation and view
- We model (a) transmission tariff of INR1,445/mscm in FY20/21 v/s actual INR1,410 in 3QFY19 and (b) volumes of 30/31mmscmd in FY20/21 v/s 35mmscmd in FY19. The lower volume can be ascribed to the possible start-up of RIL's petcoke gasifier, which could take away 5-7mmscmd of volumes.
- In 9MFY19, EBITDA stood at INR12.1b (+41% YoY), driven by tariff revision. PAT increased 25% YoY to INR6.4b (+25% YoY). We cut our EPS estimate for FY19 from INR16.5 to INR15.2; FY20/21 estimates are largely unchanged.
Gujarat State Petronet Limited (GSPL) is a natural gas infrastructure and transmission company engaged in gas transportation business. The Company is engaged in transmission of natural gas through pipelines on an open access basis from supply points to demand centers. It also generates electricity through windmills. Its segments include Gas Transportation and Windmill. It develops energy transportation infrastructure and connects natural gas supply sources, including liquefied natural gas (LNG) terminals to various markets. It has set up a 52.5 megawatt (MW) Wind Power Project at Maliya Miyana (District-Rajkot), Gorsar, and Adodar (District-Porbandar). Its subsidiaries include GSPL India Gasnet Limited, which is engaged in development of Mehsana-Bhatinda and Bhatinda-Jammu-Srinagar pipeline projects, and GSPL India Transco Limited, which is engaged in the development of Mallavaram-Bhopal-Bhilwara-Vijaipur Pipeline Project. It serves various industries, such as power and fertilizer.
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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