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India Equity Research Reports, IPO and Stock News
India Equity Research Reports, IPO and Stock News
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• Exposure to the supply constrained gas sector in India,
especially given the RIL’s KG-D6 scale-up issues
• A LNG regasifier: Dahej capacity of 10 MMTPA to increase
to 12.5 MMTPA by October 2013; Kochi to scale up by end
FY13 (5 MMTPA brownfield LNG regasification capacity)
• Rich parentage of Indian national O&G/utility companies;
higher incentive for GAIL to market RLNG, given upcoming
pipeline infra. MOU with energy company Gazprom for gas
supply; two more years to sign a SPA
• Significant recent outperformance, and rich valuations to
limit upsides in our view till near new capacity start;
incorporate a higher cost of capital and increasing
competition
• Gas shortage, high demand, surprise on spot cargoes played
out; leveraging the gas shortage and sales surprises limited
as new capacities to come only after 1.2-3.0 years
• Shareholding: Promoter 50%
• Valuation: DCF using UBS’s VCAM tool ( WACC of 11.2%
and terminal sales growth of 4%). Implied FY13E PE 13.3x
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