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P A T d e c l i n e s Q o Q o n h i g h e r g a s c o s t s …
Gujarat Gas’ revenues for Q3CY11 increased 28.8% YoY to | 653.3 crore,
above our estimates, mainly on account of higher-than-expected gas
sales volumes (326 mmscm) for the quarter. EBITDA margins increased
20 bps YoY to 18% on account of an increase in gross margins from | 4.0
per scm in Q2CY10 to | 5.0 per scm in Q3CY11. However, the gross
margins per scm decreased by | 1.1 per scm QoQ on account of higher
gas costs. The net profit for Q3CY11 increased 43.1% YoY to | 80.9 crore,
lower than our estimates on lower than expected margins per scm. We
have revised our volume estimates to 3.5 mmscmd (1260.5 mmscm) and
3.9 mmscmd (1388.2 mmscm) in CY11E and CY12E, respectively,
factoring in volume growth at higher LNG prices. Gross margins would
continue to remain strong as the company has been able to pass on
higher LNG costs to customers. We estimate CAGR of 28% and 24%
increase in revenues and net profits, respectively, over CY10-12E. We
recommend a HOLD rating on the stock with a price target of | 410.
ƒ Highlights of the quarter
Gujarat Gas reported a 3.5% YoY increase in gas sales volume from
315 mmscm in Q3CY10 to 326 mmscm in Q3CY11. The volume for
Gujarat Gas was ensured by the higher YoY procurement of shortterm LNG for the current quarter. Realisations increased by 24.9%
YoY from | 16.1 per scm in Q3CY10 to | 20 per scm in Q3CY11 to
pass on higher LNG cost to customers. EBITDA margins stood at |
3.6 per scm in Q3CY11.
V a l u a t i o n
The firm contracts for LNG would increase its gas sales volume from 3.3
mmscmd (1212 mmscm) in CY10 to 3.5 mmscmd (1260.5 mmscm) and
3.9 mmscmd (1388.2 mmscm) in CY11E and CY12E, respectively. Gujarat
Gas is trading at price/BV of 4.5x CY12E and has an RoNW of 32.3%
CY12E. We have valued the stock based on the DCF methodology (WACC
– 12%, terminal growth - 3%) to arrive at a target price of | 410.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P A T d e c l i n e s Q o Q o n h i g h e r g a s c o s t s …
Gujarat Gas’ revenues for Q3CY11 increased 28.8% YoY to | 653.3 crore,
above our estimates, mainly on account of higher-than-expected gas
sales volumes (326 mmscm) for the quarter. EBITDA margins increased
20 bps YoY to 18% on account of an increase in gross margins from | 4.0
per scm in Q2CY10 to | 5.0 per scm in Q3CY11. However, the gross
margins per scm decreased by | 1.1 per scm QoQ on account of higher
gas costs. The net profit for Q3CY11 increased 43.1% YoY to | 80.9 crore,
lower than our estimates on lower than expected margins per scm. We
have revised our volume estimates to 3.5 mmscmd (1260.5 mmscm) and
3.9 mmscmd (1388.2 mmscm) in CY11E and CY12E, respectively,
factoring in volume growth at higher LNG prices. Gross margins would
continue to remain strong as the company has been able to pass on
higher LNG costs to customers. We estimate CAGR of 28% and 24%
increase in revenues and net profits, respectively, over CY10-12E. We
recommend a HOLD rating on the stock with a price target of | 410.
ƒ Highlights of the quarter
Gujarat Gas reported a 3.5% YoY increase in gas sales volume from
315 mmscm in Q3CY10 to 326 mmscm in Q3CY11. The volume for
Gujarat Gas was ensured by the higher YoY procurement of shortterm LNG for the current quarter. Realisations increased by 24.9%
YoY from | 16.1 per scm in Q3CY10 to | 20 per scm in Q3CY11 to
pass on higher LNG cost to customers. EBITDA margins stood at |
3.6 per scm in Q3CY11.
V a l u a t i o n
The firm contracts for LNG would increase its gas sales volume from 3.3
mmscmd (1212 mmscm) in CY10 to 3.5 mmscmd (1260.5 mmscm) and
3.9 mmscmd (1388.2 mmscm) in CY11E and CY12E, respectively. Gujarat
Gas is trading at price/BV of 4.5x CY12E and has an RoNW of 32.3%
CY12E. We have valued the stock based on the DCF methodology (WACC
– 12%, terminal growth - 3%) to arrive at a target price of | 410.
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