GSPL - Volumes under pressure - Koak

- GSPL's Q3FY13 result is lower than our estimates mainly on account of 1). Lower revenue from electricity segment, 2). Higher operating cost and 3). Lower gas transmission volumes. GSPL has reported a PAT of Rs.1.19 Bn, -5.7% YoY and -10.4% QoQ.

- Gas transmission volume is lower by 4.7% QoQ due to decline in RIL's KG gas production but revenue from gas transmission segment has increased by 0.1% QoQ mainly due to higher implied tariff on account of 'take-or-pay' clause.

- We expect gas transmission volume to improve marginally in the shortterm with the increased supply of imported RLNG from proposed expansion of Dahej and Hazira terminals.

- We expect GSPL to report an EPS of Rs.8.99 FY13E and Rs.9.18 FY14E. The recent correction in the stock price discounts most of the negatives and hence we believe there is decent upside in the stock. We recommend BUY rating on GSPL with a target price of Rs.80/Share.

Source : Equity Bulls

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