2026-07-13 08:19:29
Latest Post
LTM Limited Commences FY27 with Robust Trajectory as Q1 Net Profit Climbs 17% Year-on-Year to ₹14,686 Million
Gowra Leasing & Finance Q1 FY27 Net Profit Surges 123% Year-on-Year to ₹288.32 Lakh
Avenue Supermarts Unveils Q1 FY27 Performance: Net Profit Climbs to ₹860.44 Crore Amid Strong Operational Scaling
Avantel Limited Net Profit Climbs 67% Year-on-Year to ₹539.46 Lakh in Q1 FY27; Sequentially Up 13%
Just Dial Net Profit Climbs 4.1% Year-on-Year to ₹1,662.2 Million; Sequentially Surges 66%
Research
Gujarat Gas Company - Gross Margin Expansion boosts net profit - BRICS
Posted On : 2013-02-22 21:48:18( TIMEZONE : IST )
GGAS' net profit grew 178% yoy to Rs701mn (vs. our estimate of Rs711mn) in Q4CY12, due to expansion of 147% yoy in gross margin to Rs5.7/scm (vs. our estimate of Rs5.1/scm), in spite of a decline of 14% yoy in volume to 2.93mmscmd (vs. our estimate of 3.1mmscmd). We raise our CY14-16 gross margin estimates and lower our CY13-CY16 volume estimates to factor in the lower volume growth and the company's strategy of targeting higher margin customers. Our EPS estimates for CY13-CY16 are down by 5-8%. Our DCF-based target price is down by 6% to Rs371, due to the change in our earnings estimates and rollover to Q4CY13 estimates. Maintain BUY.
Profit up 178% yoy, gross margin expands by 147% yoy
GGAS' net profit grew 178% yoy to Rs701mn, as against our expectation of Rs711mn, on account of expansion of 147% yoy in gross margin to Rs5.7/scm. Sales volume declined 14% yoy to 2.9mmscmd (vs. our estimate of 3.1mmscmd), due to the general industrial slowdown and rising cost of LNG, which constituted 47% of the company's sourcing mix during the quarter. Other income fell 51% yoy to Rs102mn. GGAS has received authorisation from the Petroleum and Natural Gas Regulatory Board (PNGRB) for providing services in the city gas distribution areas of Surat, Bharuch and Ankaleshwar.
Raising CY14-16 gross margin estimates to Rs5/scm, while lowering CY13-16 volume estimates by 7-10%
We raise our CY14-15 gross margin estimates by 13% to Rs5/scm from Rs4.4/scm and our CY16 gross margin estimate by 11% to Rs5/scm, in line with the company's strategy of focusing on customers who can absorb the rising gas prices. GGAS' volume growth will be lower, due to reduced demand from industrial consumers. Hence, we lower our volume estimate by 6% to 3.2mmscmd for CY13, by 10% to 3.5mmscmd for CY14, by 10% to 3.8mmscmd for CY15 and by 11% to 4mmscmd for CY16. As a result of these changes in assumptions, our EPS estimates are down by 4.7% to Rs23.2 for CY13, by 7.7% to Rs25.6 for CY14, by 7.8% to Rs27.4 for CY15 and by 8.2% to Rs30.4 for CY16.
Lowering target price by 6% to Rs371 (28% upside). Maintain Buy.
We lower our DCF-based target price by 6% to Rs371, due to the change in our estimates and rollover to Q4CY13 estimates. We believe that a change in promoter will not be negative for GGAS, as GSPC can ensure regular gas supply. Moreover, since GSPC charges market based prices in its areas of operation, the fears of a contraction in its gross margin could be unfounded. The stock trades at 12.5x CY13 and 11.3xCY14 earnings and at a 28% upside to our target price of Rs371. Maintain Buy.
