Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Gujarat State Petronet Limited ------------------------------------------ Maintain OUTPERFORM
Higher volumes and tariffs lead to EBITDA beat; higher DD&A, interest costs hurt
● GSPL reported 1Q EPS of Rs2.4, down 9% QoQ but 6% ahead of
our estimate. Revenue and EBITDA were up 11% QoQ, although
higher-than-expected DD&A and interest costs hurt PAT (likely
indicating capitalisation of new pipeline assets in 1Q).
● Transmission volumes (36.8 mmscmd) were up 5% QoQ, which
we estimate were helped by a 2.3 mmscmd (0.6 MTPA) increase
in imports at Hazira LNG. Tariffs are up 7% QoQ, and at Rs850
per 1000 SCM are back at 3Q11 levels.
● Given the beaten-down expectations, this increase in volumes
may surprise the market. LNG-backed volume growth may,
however, be subject to seasonality (power demand) and be at risk
to LNG import prices.
● GSPL has material spare capacity within the Gujarat network, and
is building three new large pipelines – in the hope of long-term
gas volume growth in India. In the near term, a lack of gas
supplies could constrain EPS and valuation multiples, although
the utility nature of existing volumes and reasonable valuations
help the stock outperform a weak market. We maintain our
OUTPERFORM rating.
1Q12 better than expected
GSPL reported 1Q12 PAT of Rs1.37 bn, 6% ahead of our estimate
but down 9% QoQ. Revenue was up 11% QoQ, while operating costs
fell 12%. EBITDA increased 14% QoQ. Total depreciation rates have
now normalised, with GSPL’s reduction in rates to 3.17% completed in
the last quarter, but ended up higher than our forecasts. EBIT was
down 11% QoQ as a result. Interest costs were up sharply (up 37%
QoQ), but lower tax rates helped. The higher DD&A and interest costs
suggest capitalisation of material new pipeline assets in 1Q.
Volume increase likely driven by higher imports at Hazira
The QoQ revenue surprise was led by: (1) 5% higher volumes; now at
36.8 mmscmd, and (2) 7% higher headline tariff, which at Rs850 per
1000 SCM is now back at 3Q12 levels. Even though marginal, GSPL’s
volumes have increased after four quarters, despite top-down
pressure on gas supplies (D6, APM, PMT). We think this was driven
by a 2.3 mmscmd (0.6 MTPA) increase in volumes at the Hazira LNG
terminal (not listed), which we estimate operated at c.2.2 MTPA run
rate for the quarter (on a potential 3 MTPA capacity).
We note, however, that the June quarter was seasonally strong for
GSPL last year, with volumes falling subsequently on lack of demand
(likely from the power sector). These LNG-backed buoyancy in
volumes are at risk of a near-term reversal. The increase in tariffs may
be a result of one-offs in 4Q, and changing mix of gas transportation.
High leverage to domestic gas production
GSPL now has spare capacity within the Gujarat network and is
planning to build three large new pipelines over the next 3-4 years, on
the arguments that: (1) Indian gas consumption will grow over time
and (2) timing infrastructure to gas supply is difficult. In the near term,
however, a lack of volume growth can constrain GSPL’s EPS and
multiples, although the utility nature of the business can help the stock
in a weak market. We maintain our OUTPERFORM rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Gujarat State Petronet Limited ------------------------------------------ Maintain OUTPERFORM
Higher volumes and tariffs lead to EBITDA beat; higher DD&A, interest costs hurt
● GSPL reported 1Q EPS of Rs2.4, down 9% QoQ but 6% ahead of
our estimate. Revenue and EBITDA were up 11% QoQ, although
higher-than-expected DD&A and interest costs hurt PAT (likely
indicating capitalisation of new pipeline assets in 1Q).
● Transmission volumes (36.8 mmscmd) were up 5% QoQ, which
we estimate were helped by a 2.3 mmscmd (0.6 MTPA) increase
in imports at Hazira LNG. Tariffs are up 7% QoQ, and at Rs850
per 1000 SCM are back at 3Q11 levels.
● Given the beaten-down expectations, this increase in volumes
may surprise the market. LNG-backed volume growth may,
however, be subject to seasonality (power demand) and be at risk
to LNG import prices.
● GSPL has material spare capacity within the Gujarat network, and
is building three new large pipelines – in the hope of long-term
gas volume growth in India. In the near term, a lack of gas
supplies could constrain EPS and valuation multiples, although
the utility nature of existing volumes and reasonable valuations
help the stock outperform a weak market. We maintain our
OUTPERFORM rating.
1Q12 better than expected
GSPL reported 1Q12 PAT of Rs1.37 bn, 6% ahead of our estimate
but down 9% QoQ. Revenue was up 11% QoQ, while operating costs
fell 12%. EBITDA increased 14% QoQ. Total depreciation rates have
now normalised, with GSPL’s reduction in rates to 3.17% completed in
the last quarter, but ended up higher than our forecasts. EBIT was
down 11% QoQ as a result. Interest costs were up sharply (up 37%
QoQ), but lower tax rates helped. The higher DD&A and interest costs
suggest capitalisation of material new pipeline assets in 1Q.
Volume increase likely driven by higher imports at Hazira
The QoQ revenue surprise was led by: (1) 5% higher volumes; now at
36.8 mmscmd, and (2) 7% higher headline tariff, which at Rs850 per
1000 SCM is now back at 3Q12 levels. Even though marginal, GSPL’s
volumes have increased after four quarters, despite top-down
pressure on gas supplies (D6, APM, PMT). We think this was driven
by a 2.3 mmscmd (0.6 MTPA) increase in volumes at the Hazira LNG
terminal (not listed), which we estimate operated at c.2.2 MTPA run
rate for the quarter (on a potential 3 MTPA capacity).
We note, however, that the June quarter was seasonally strong for
GSPL last year, with volumes falling subsequently on lack of demand
(likely from the power sector). These LNG-backed buoyancy in
volumes are at risk of a near-term reversal. The increase in tariffs may
be a result of one-offs in 4Q, and changing mix of gas transportation.
High leverage to domestic gas production
GSPL now has spare capacity within the Gujarat network and is
planning to build three large new pipelines over the next 3-4 years, on
the arguments that: (1) Indian gas consumption will grow over time
and (2) timing infrastructure to gas supply is difficult. In the near term,
however, a lack of volume growth can constrain GSPL’s EPS and
multiples, although the utility nature of the business can help the stock
in a weak market. We maintain our OUTPERFORM rating.
No comments:
Post a Comment