Gujarat State Petronet Ltd - Q1FY14 Result Update
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Higher tariff boosts Q1 performance, volume continues to disappoint
GSPL’s net profit of Rs1.26bn was higher than our estimate of Rs1.16 on account of higher transmission tariff. Transmission tariff increased by 56.3% yoy to Rs1.41/scm (qoq -20.2%), which was higher than our estimate of Rs1.20/scm. Higher transmission tariff was on account of take-or-pay contract, whereby consumers continued to pay tariff despite transmitting lower gas volumes.
GSPL’s volumes for the quarter declined by 28.9% yoy to 2,015mmscm. The fall in gas transmission volume was due to falling gas production from KG D6. However on sequential basis, transmission volumes increased marginally by 1.1%. GSPL’s operating profit for the quarter stood at Rs2.7bn (yoy +9.2% qoq -17.7%) which was higher than our estimate.
We believe that concerns relating to transmission volumes will be an overhang on GSPL in the near term. However, we note that LNG capacities scheduled to come up by early FY15 could give much needed fillip to GSPL’s gas volumes. We value GSPL on DCF basis given the long term earnings visibility and arrive at a fair value of Rs78 per share. We have used WACC of 11.5% and terminal growth rate of 2% for DCF valuation. We maintain our BUY rating on the stock with a target price of Rs78. At the CMP, the stock is trading at 7.2x and 3.7x FY15e EPS and EBITDA respectively.
Actual v/s Estimates
Y/E, Mar (Rs. m)
|
Q1FY14
|
Q4FY13
|
qoq (%)
|
Q1FY13
|
yoy (%)
|
LKP Estimates
|
Deviation (%/bps)
|
Revenue
|
2,961
|
3,590
|
-17.5%
|
2,676
|
10.6%
|
2,690
|
10.1%
|
EBITDA
|
2,691
|
3,268
|
-17.7%
|
2,465
|
9.2%
|
2,368
|
13.7%
|
EBITDA (%)
|
90.9%
|
91.0%
|
-14 bps
|
92.1%
|
-124 bps
|
88.0%
|
286 bps
|
PAT
|
1,263
|
1,615
|
-21.8%
|
1,248
|
1.1%
|
1,159
|
8.9%
|
LKP Research
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