Result Update: GUJARAT STATE PETRONET LTD (GSPL) - ACCUMULATE - TP Rs.182 - Kotak

GSPL's Q4FY17 result is marginally higher than our estimates. GSPL reported PAT of Rs.1.27 bn (as against our estimate of Rs.1.2 bn), higher 7% qoq and 28% yoy mainly on account of higher other income and lower tax paid. However, Gas transmission volume has decreased by 11% qoq and 4% yoy to 23.38 mmsmcd due to lower gas availability from Rasgas for a few days. Gas transmission tariffs have increased by 9.3% qoq and 16% yoy to Rs.1.197/mmscmd (includes other income). For FY17, GSPL has declared a final dividend of Rs.1.5/share.

Going forward, we expect the company to benefit on account of both 1). Higher gas transmission volumes and 2). Expected upward revision in tariffs. Higher gas transmission volumes will be supported by 1) lower LNG prices, and 2) RLNG demand from the power sector.

Additionally, rising city gas distribution growth opportunities, potential shift to natural gas due to environmental/pollution norms (industrial / CNG) and volumes from Mundra LNG terminal (FY18 onwards) provides support to long term volumes. We are introducing FY19E earnings. From Q2FY18, gas demand is expected to go up with the startup of RIL's ROGC, an incremental volume of 4-5 mmscmd. We expect GSPL to report an EPS of Rs.11.4 (earlier Rs 11.1) and cash EPS of Rs.14.7 for FY18E and an EPS of Rs.12.7 and cash EPS of Rs16.2 for FY19E. We maintain Accumulate (BUY on dips) on GSPL with a DCF based price target of Rs.182/Share (earlier Rs.175).

Shares of GUJARAT STATE PETRONET LTD. was last trading in BSE at Rs.170.3 as compared to the previous close of Rs. 173.75. The total number of shares traded during the day was 37861 in over 536 trades.

The stock hit an intraday high of Rs. 174.5 and intraday low of 170. The net turnover during the day was Rs. 6492203.

Source : Equity Bulls

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