Buy Gujarat State Petronet Volume decline marginally : :Emkay

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Gujarat State Petronet

Volume decline marginally

BUY

CMP: Rs98                                        Target Price: Rs120

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n     Transmission tariff grew by 7.3% YoY to Rs.0.83/scm ( -1.7% QoQ) and volume fell marginally by 0.3% YoY & 4.2% QoQ to 35.2mmscmd

n     EBIDTA at Rs.2.6bn, against Rs.2.3bn, growth of 10.8% YoY mainly due to higher realization and higher income from sale of electricity (Rs.108mn against Rs.24mn a year ago)

n     Revenue and profitability decline sequentially in tandem with drop in transmission volume. Revenue decline by 2.2% to Rs.2.8bn, while net profit fell by 6% to Rs.1.3bn.

n     Valuations look attractive at 9.4x FY13E EPS and 1.8x P/Bv, maintain BUY rating on the GSPL with TP of Rs.120