Gujarat Gas - Margins peak; Volume decline continues - Emkay

Reco: HOLD
CMP: Rs 194
Target Price: Rs 231

- GGCL results were above street and our estimates at the EBITDA level of Rs1.5bn (vs. our estimate at Rs0.9bn), mainly due to lower RM costs, especially RLNG

- On the back of a lower RM cost, gross margin/scm grew by 90% qoq and 88% yoy to Rs8.6/scm. EBIDTA/scm also climbed by 148% qoq and 136% yoy to Rs6.3/scm

- Natural gas volume sold during the quarter was at 239mmscm, a decline of 9.5% qoq and 17% yoy, mainly on the back of lower offtake from the industrial retail segment

- Lowered valuation multiple on volume growth concern; foresee no major event in the near term to drive earnings and valuations. Maintain Hold with a revised TP of Rs231

Source : Equity Bulls

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