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Research
Gujarat State Petronet - Volume growth a challenge - Elara Capital
Posted On : 2012-08-21 20:45:37( TIMEZONE : IST )
Volumes flat; results in-line
GSPL's Q1FY13 results offered no surprises on both sales and earnings. Net sales were at INR2.70bn vs. our est. of INR2.80bn; the Street est. was closer at INR2.68. EBITDA was at INR2.49bn vs. our est. of INR2.55 and Street at INR2.45bn. There was no significant surprise on any of the below EBITDA items as well. The PAT was at INR1.25bn vs. our/Street est. of INR1.26bn/INR1.22bn. As a whole, the financial performance was in-line with our and Street estimates. In terms of volumes, the Q1FY13 volumes were at 31.13mmscmd, flat QoQ (Q4FY12 = 31.10mmscmd) but down 15% from Q1FY12. On this front, GSPL has shown some resilience in maintaining its volumes as opposed to other gas players such as GAIL and PLNG which showed a decline in Q1FY13. Volume contribution from KGD6 is not known but we estimate it would be 6-8mmscmd for Q1FY13, down from 10mmscmd in mid-FY12. Tariffs were back to normal at INR903/tcm, down from Q4FY12 which had slightly higher tariffs at INR956/tcm.
FY13 expectations: Volumes should be flat at best
We expect GSPL's volumes to average 33.5mmscmd for FY13 overall, despite assuming LNG contribution in H2FY13. This translates into a volume de-growth of 1.6%. Tariffs are expected to be constant and we expect GSPL to report FY13 PAT of INR5.1bn and EPS of INR9.1.
Volume growth still looking subdued; Maintain Reduce
Post the recent run-up in the shares due to positive E&P news for RIL, GSPL may languish in the absence of further positive news. Note that the stocks dependent on gas supply i.e. GAIL and GSPL are already factoring supply to increase by FY15/16. Thus, more news shouldn't lead to earnings upgrades as such, but just add more certainty to Street volume assumptions. GSPL is trading close to 8x P/E on FY13 earnings (flattish earnings over FY12 earnings). FY14 may see 10% growth, based on our estimates. We believe with the key stock price driver of volume growth subdued, GSPL is unlikely to see a huge rerating in the medium term. Maintain Reduce and TP of INR70.
