MOSL: GUJARAT STATE PETRONET (Neutral)-EBITDA below estimate-strong transmission volumes
Gujarat State Petronet: EBITDA below estimate; strong transmission volumes
(GUJS IN, Mkt Cap USD1.7b, CMP INR174, TP INR187, 8% Upside, Neutral)
Reported revenue rose 43% YoY (flat QoQ) to INR3.5b, falling short of our estimate of INR3.6b, primarily due to lower-than-expected transmission volumes of 34.1mmscmd (est. of 35mmscmd). EBITDA of INR2.9b (+44% YoY, -3% QoQ) was below our estimate of INR3.1b due to higher O&M expenses of INR164/mscm (+1% YoY, +20% QoQ). Reported PAT stood at INR1.6b (est. of INR2.0b; +24% YoY, -13% QoQ) - the difference at the PAT level increased due to lower other income of INR171m (est. of INR357m; -37% YoY, +42% QoQ) and a higher tax rate of 37.5% (est. of 30%; 30% in 3QFY18 and 28% in 4QFY17).
Strong transmission volumes; in-line implied tariff
- Transmission volume grew 46% YoY (+2% QoQ) to 34.1mmscmd (est. of 35mmscmd) in 4QFY18, which is believed to be led by higher offtake from the power sector.
- Implied transmission tariff stood at INR1,126/mscm (est. of INR1,127; -6% YoY, flat QoQ).
Valuation and view
- We model (a) transmission tariff of INR1,200/mscm in FY19/20 v/s actual INR1,126 in 4QFY18 and (b) volumes of 32mmscmd in FY19/FY20 v/s actual 34.1mmscmd in 4QFY18.
- Medium-term risk is some volumes (~5mmscmd) going away with the start of RIL's petcoke gasification project. For every 5% variation in volumes/tariff, earnings change by ~6%. The stock trades at 12.9x FY20E adj. EPS of INR13.4. Our 10x FY20E P/E based TP stands at INR187. Maintain Neutral.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.