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B a d q u a r t e r … o n l y a n a b e r r a t i o n …
Gujarat Gas reported a disappointing set of results for Q4CY11 with PAT
declining 70.2% YoY from | 82.5 crore to | 25 crore. Sharp rupee
depreciation, higher gas costs as well as lower than expected realisations
dented profits for the current quarter. However, revenues for Q4CY11
increased 26.8% YoY to | 651 crore mainly on account of higher
realisations to pass on the costs. EBITDA margins declined 2060 bps YoY
and 1340 bps QoQ to 4.6% on account of a decrease in gross margins
from | 5.0 per scm in Q3CY11 to | 2.6 per scm in Q4CY11. The volumes
stood at 315 mmscm (3.4 mmscmd) for Q4CY11. We have revised our
volume estimates to 3.6 mmscmd (1332.4 mmscm) in CY12E factoring in
volume growth at higher LNG prices. The gross margins would improve
as the company has increased sales prices to pass on higher LNG costs to
customers. We estimate a 34.8% and 29.2% increase in revenues and net
profits, respectively in CY12E. We recommend a HOLD rating on the stock
with a price target of | 394.
ƒ Highlights of the quarter
Gujarat Gas reported a 1.9% YoY increase in gas sales volume from
309 mmscm in Q4CY10 to 315 mmscm in Q4CY11. The volume for
Gujarat Gas was ensured by the higher procurement YoY of shortterm LNG for the current quarter. The realisations increased by
24.7% YoY from | 16.6 per scm in Q4CY10 to | 20.7 per scm in
Q4CY11 to pass on higher LNG cost to customers. However, the
company was unable to pass on the complete costs to customers.
EBITDA margins stood at | 1 per scm in Q4CY11.
V a l u a t i o n
The firm contracts for LNG would increase its gas sales volume from 3.4
mmscmd (1246 mmscm) in CY11 to 3.6 mmscmd (1332.4 mmscm) in
CY12E. The stock is trading at P/BV of 5.2x CY12E and has an RoNW of
36.4% CY12E. We believe Gujarat Gas’ stake sale would provide
downside support to the stock in the coming quarter. We have valued the
stock based on the DCF methodology (WACC – 11.9%, terminal growth -
3%) to arrive at a target price of | 394.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
B a d q u a r t e r … o n l y a n a b e r r a t i o n …
Gujarat Gas reported a disappointing set of results for Q4CY11 with PAT
declining 70.2% YoY from | 82.5 crore to | 25 crore. Sharp rupee
depreciation, higher gas costs as well as lower than expected realisations
dented profits for the current quarter. However, revenues for Q4CY11
increased 26.8% YoY to | 651 crore mainly on account of higher
realisations to pass on the costs. EBITDA margins declined 2060 bps YoY
and 1340 bps QoQ to 4.6% on account of a decrease in gross margins
from | 5.0 per scm in Q3CY11 to | 2.6 per scm in Q4CY11. The volumes
stood at 315 mmscm (3.4 mmscmd) for Q4CY11. We have revised our
volume estimates to 3.6 mmscmd (1332.4 mmscm) in CY12E factoring in
volume growth at higher LNG prices. The gross margins would improve
as the company has increased sales prices to pass on higher LNG costs to
customers. We estimate a 34.8% and 29.2% increase in revenues and net
profits, respectively in CY12E. We recommend a HOLD rating on the stock
with a price target of | 394.
ƒ Highlights of the quarter
Gujarat Gas reported a 1.9% YoY increase in gas sales volume from
309 mmscm in Q4CY10 to 315 mmscm in Q4CY11. The volume for
Gujarat Gas was ensured by the higher procurement YoY of shortterm LNG for the current quarter. The realisations increased by
24.7% YoY from | 16.6 per scm in Q4CY10 to | 20.7 per scm in
Q4CY11 to pass on higher LNG cost to customers. However, the
company was unable to pass on the complete costs to customers.
EBITDA margins stood at | 1 per scm in Q4CY11.
V a l u a t i o n
The firm contracts for LNG would increase its gas sales volume from 3.4
mmscmd (1246 mmscm) in CY11 to 3.6 mmscmd (1332.4 mmscm) in
CY12E. The stock is trading at P/BV of 5.2x CY12E and has an RoNW of
36.4% CY12E. We believe Gujarat Gas’ stake sale would provide
downside support to the stock in the coming quarter. We have valued the
stock based on the DCF methodology (WACC – 11.9%, terminal growth -
3%) to arrive at a target price of | 394.
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