MOSL: GUJARAT STATE PETRONET (Neutral)-Strong transmission volumes drive earnings
Gujarat State Petronet: Strong transmission volumes drive earnings
(GUJS IN, Mkt Cap USD1.6b, CMP INR195, TP INR196, 1% Upside, Neutral)
Reported revenue increased 32% YoY (+12% QoQ) to INR3.9b, ahead of our estimate of INR3.6b, primarily led by higher-than-expected transmission volumes of 36.5mmscmd (est. of 34mmscmd). EBITDA of INR3.4b (+24% YoY, +19% QoQ) exceeded our estimate of INR3b, led by lower O&M expense of INR143/mscm (-28% QoQ). Reported PAT of INR1.4b (-5% YoY, -8% QoQ) missed our estimate of INR1.7b due to (a) higher interest cost of INR579m (est. of INR260m; +448% YoY, +462% QoQ), led by increased borrowing for Gujarat Gas acquisition, (b) lower other income of INR54m (est. of INR207m; -67% YoY, -68% QoQ) and (c) a higher tax rate of 41% (est. of 33%; 38% in 4QFY18 and 36% in 1QFY18).
Strong transmission volumes; in-line implied tariff
- Transmission volume grew 36% YoY (+7% QoQ) to 36.5mmscmd (est. of 34mmscmd) in 1QFY19.
- Implied transmission tariff stood at INR1,141/mscm (est. of INR1,155; -1% YoY, +1% QoQ).
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.
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