Gujarat Gas Company - Higher realisation drives profitability BUY::Emkay

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Gujarat Gas Company

Higher realisation drives profitability

BUY

CMP: Rs405                                        Target Price: Rs481

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n     GGCL reported results which were marginally above our estimates with revenues at Rs.5.8bn and PAT at Rs.0.9bn, primarily due to better realisation during the quarter

n     EBIDTA at Rs.1.3bn, against Rs.0.9bn, growth of 51% YoY. Margin expanded by 334bps to 23.9% sequentially. Gross margin grew by 26.6% YoY and 36.5% QoQ to Rs.5.9/scm

n     Natural gas volume sold during the quarter was 302mmscm, marginal growth of 1.8% YoY and flat on sequentially

n     Given its monopoly in cities of Gujarat, expected volume growth plus zero debt and robust business model with no commodity risk, We maintain BUY rating with TP of Rs.481