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For 3QCY2011, Gujarat Gas (GGAS) reported a good performance on the
revenue, EBITDA and PAT front. Growth during the quarter was led by higher
realization. We remain Neutral on the stock.
Higher realization drives top-line growth: For 3QCY2011, GGAS reported
top-line growth of 28.7% yoy to `653cr mainly on account of higher realization.
Average sales realization stood at `19.7/scm (up 24.7% yoy), driven by hike in
selling prices of the industrial retail and CNG segments.
Other income boosts net profit growth: Cost of goods sold during the quarter
increased by 28.8% yoy to `490cr on account of higher proportion of expensive
RLNG sales coupled with INR depreciation against the USD. Hence, the
company’s EBITDA grew by 30.4% yoy (in-line with net sales growth) to `118cr.
Other income during the quarter grew by 100.9% yoy to `10cr. Consequently, the
company’s net profit grew by 41.5% yoy to `80cr.
Outlook and valuation: GGAS still awaits authorization from PNGRB for its areas
of operations. However, to pursue growth, the company has bid for a new area
within Gujarat under the third round of bidding conducted by PNGRB. Besides
volume growth, to maintain margins, the company plans to price its gas as per
the pricing of alternative fuels. At current levels, the stock is trading at 17.8x
and 15.9x CY2011E and CY2012E earnings, respectively. We believe the
stock is fairly valued at current levels and, hence, maintain our Neutral stance
on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 3QCY2011, Gujarat Gas (GGAS) reported a good performance on the
revenue, EBITDA and PAT front. Growth during the quarter was led by higher
realization. We remain Neutral on the stock.
Higher realization drives top-line growth: For 3QCY2011, GGAS reported
top-line growth of 28.7% yoy to `653cr mainly on account of higher realization.
Average sales realization stood at `19.7/scm (up 24.7% yoy), driven by hike in
selling prices of the industrial retail and CNG segments.
Other income boosts net profit growth: Cost of goods sold during the quarter
increased by 28.8% yoy to `490cr on account of higher proportion of expensive
RLNG sales coupled with INR depreciation against the USD. Hence, the
company’s EBITDA grew by 30.4% yoy (in-line with net sales growth) to `118cr.
Other income during the quarter grew by 100.9% yoy to `10cr. Consequently, the
company’s net profit grew by 41.5% yoy to `80cr.
Outlook and valuation: GGAS still awaits authorization from PNGRB for its areas
of operations. However, to pursue growth, the company has bid for a new area
within Gujarat under the third round of bidding conducted by PNGRB. Besides
volume growth, to maintain margins, the company plans to price its gas as per
the pricing of alternative fuels. At current levels, the stock is trading at 17.8x
and 15.9x CY2011E and CY2012E earnings, respectively. We believe the
stock is fairly valued at current levels and, hence, maintain our Neutral stance
on the stock.
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