MOSL: GUJARAT GAS (Buy)-EBITDA above estimate led by better volumes and EBITDA/scm
Gujarat Gas: EBITDA above estimate led by better volumes and EBITDA/scm
(GUJGA IN, Mkt Cap USD1.8b, CMP INR842, TP INR1014, 20% Upside, Buy)
- GUJGA reported EBITDA of INR2.0b (+17% YoY, -1% QoQ), above our estimate of INR1.6b, led by better-than-expected volumes and margins. PAT increased 42% YoY (-2% QoQ) to INR600m.
- PNG volumes strong: PNG industrial/commercial volumes stood at 4.5mmscmd (+22% YoY, +11% QoQ), and PNG household volumes at 0.5mmscmd (+9% YoY, +14% QoQ). Despite higher spot LNG prices, the company has seen a strong pick-up, led by higher offtake from industrial customers.
- CNG volumes up 11% YoY: CNG volumes stood at 1.3mmscmd (+11% YoY, +3% QoQ). Unless CNG volumes become a larger contributor, the company would continue witnessing volatility in volumes and margins, in our view.
- EBITDA/scm stood at INR3.5: EBITDA/scm declined 1% YoY (-10% QoQ) to INR3.5, above our estimate of INR3.1, led by higher gas cost. We have modeled EBITDA/scm at INR4.3/4.4 for FY18/19.
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.
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