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Gujarat Gas Company
Reco: ACCUMULATE
CMP: Rs 389
Target Price: Rs 448
Depreciation of rupee drags margin and profitability
· GGCL reported results which were significantly below street and our estimates with revenues at Rs.6.5bn and PAT at Rs0.2bn, mainly due to depreciation of rupees and higher Spot LNG prices which drags the overall profitability
· EBIDTA at Rs.0.29bn, against Rs.1.2bn, decline of 77.4% YoY. Operating margin declined by 1357bps to 4.5% sequentially. Gross margin declined by 46% QoQ to Rs2.5/scm
· Natural gas volume sold during the quarter was 314mmscm, decline of 3.7% QOQ and flat on YoY
· Lowered our TP by 6.8% to Rs.448 on the back of lower volume assumption. Also recent news on proposed cap on gas marketing margin which is to be decided by PNGRB would keep the stock under pressure until any clarity emerges
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