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Gujarat State Petronet (GSPT.BO; Rs96.95; 1M)
Takeaways from Mumbai – GSPL presented at our India Investor Conference in
Mumbai. Below are key takeaways.
Looking at 10% vol growth in FY12E - Mgmt expects overall vols to grow by
c10% in FY12E (35-36 mmscmd in FY11), driven primarily by customers such as
industrial (Essar Steel, Essar Oil), city gas distribution (GSPC Gas), and fertiliser
(GNFC). This does not include c5 mmscmd of demand from idle gas-based
power plants and another c5 mmscmd of demand from GSPC's upcoming power
plants, both of which would be largely contingent on an increase in domestic gas
supplies. Longer term, mgmt expects Gujarat vols to increase to c45 mmscmd in
two years and by 2x in five years.
LNG to be main driver of near-term vol growth - In the absence of domestic
gas supply growth, mgmt expects near-term vols to come primarily from LNG -
Petronet's Dahej terminal is currently trending at a run rate of c10 MMTPA (vs a
doable capacity of 10.5-11) and Shell's Hazira terminal is currently trending at
c2.5 MMTPA (vs a base load capacity of c3.7 MMTPA and a peak load capacity
of c4.5 MMTPA), which can together add c6-7 mmscmd of vols.
Expect c40% initial utilisation in new pipelines - Mgmt expects initial
utilisation in the Mallavaram-Bhilwara and Mehsana-Bhatinda pipelines, which
are expected to come up within three years of receiving authorisation, of c40%,
driven by a ramp-up from GSPC's KG block (first gas from CY13E at c6
mmscmd; to ramp up to c10mmscmd within two years) and an increase in LNG
supplies from the upcoming Pipavav FSRU and Petronet's Dahej expansion. The
new Mundra LNG terminal is expected to come up within four years.
Mgmt reiterates no downside to tariffs - Mgmt reiterated its long-held view that
Gujarat network tariffs are unlikely to come down post review by the PNGRB.
While the company has filed tariffs at higher-than-existing rates with the
regulator, it expects them to settle at or near existing levels. We reiterate Buy as
we believe the steep valuation discount that GSPL trades at relative to peers is
unwarranted, and clarity on tariffs could help narrow this differential in the near
term. Longer term, we remain positive on the robust growth outlook for the
company.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Gujarat State Petronet (GSPT.BO; Rs96.95; 1M)
Takeaways from Mumbai – GSPL presented at our India Investor Conference in
Mumbai. Below are key takeaways.
Looking at 10% vol growth in FY12E - Mgmt expects overall vols to grow by
c10% in FY12E (35-36 mmscmd in FY11), driven primarily by customers such as
industrial (Essar Steel, Essar Oil), city gas distribution (GSPC Gas), and fertiliser
(GNFC). This does not include c5 mmscmd of demand from idle gas-based
power plants and another c5 mmscmd of demand from GSPC's upcoming power
plants, both of which would be largely contingent on an increase in domestic gas
supplies. Longer term, mgmt expects Gujarat vols to increase to c45 mmscmd in
two years and by 2x in five years.
LNG to be main driver of near-term vol growth - In the absence of domestic
gas supply growth, mgmt expects near-term vols to come primarily from LNG -
Petronet's Dahej terminal is currently trending at a run rate of c10 MMTPA (vs a
doable capacity of 10.5-11) and Shell's Hazira terminal is currently trending at
c2.5 MMTPA (vs a base load capacity of c3.7 MMTPA and a peak load capacity
of c4.5 MMTPA), which can together add c6-7 mmscmd of vols.
Expect c40% initial utilisation in new pipelines - Mgmt expects initial
utilisation in the Mallavaram-Bhilwara and Mehsana-Bhatinda pipelines, which
are expected to come up within three years of receiving authorisation, of c40%,
driven by a ramp-up from GSPC's KG block (first gas from CY13E at c6
mmscmd; to ramp up to c10mmscmd within two years) and an increase in LNG
supplies from the upcoming Pipavav FSRU and Petronet's Dahej expansion. The
new Mundra LNG terminal is expected to come up within four years.
Mgmt reiterates no downside to tariffs - Mgmt reiterated its long-held view that
Gujarat network tariffs are unlikely to come down post review by the PNGRB.
While the company has filed tariffs at higher-than-existing rates with the
regulator, it expects them to settle at or near existing levels. We reiterate Buy as
we believe the steep valuation discount that GSPL trades at relative to peers is
unwarranted, and clarity on tariffs could help narrow this differential in the near
term. Longer term, we remain positive on the robust growth outlook for the
company.
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