Gujarat Gas - Result Update - ICICI Securities

Gujarat Gas' Q4FY20 results were marginally below our estimates on the profitability front while sales volume were above estimates. Revenues increased 39.8% YoY to Rs. 2666.6 crore (our estimate: Rs. 2281.7 crore). Volumes increased sharply 53% YoY to 9.9 mmscmd. Realisation was at Rs. 29.5/scm (our estimate: Rs. 29/scm). Gross margins were at Rs. 7.1/scm, below our estimate of Rs. 8.1/scm. Although gross margins increased QoQ, growth was lower than our estimates due to higher percentage procurement of high priced contracted LNG. Hence, EBITDA was at Rs. 426.7 crore, up 67.9% YoY (our estimate: Rs. 462.2 crore). Subsequently, PAT increased 111.1% YoY to Rs. 245.9 crore (our estimate: Rs. 259 crore), also supported by lower tax rate.

Valuation & Outlook

Currently, sales volume are at 5.5 mmscmd, down ~45% from pre-Covid level. In H1FY21E, we expect report volume de-growth with growth set to be seen from Q3FY21E onwards. In the long term, increase in volumes driven by regulatory tailwinds, further penetration in existing geographical areas (GAs) and aggressive expansion in newly acquired gas will lead to sustainable growth. Due to recent run up in stock price, we revise our rating on the stock from BUY to HOLD and maintain TP of Rs. 290 (18x FY22E EPS).

For details, click on the link below https://www.icicidirect.com/mailimages/IDirect_GujaratGas_Q4FY20.pdf

Shares of Gujarat Gas Ltd was last trading in BSE at Rs.288.6 as compared to the previous close of Rs. 285.6. The total number of shares traded during the day was 186659 in over 7002 trades.

The stock hit an intraday high of Rs. 295 and intraday low of 287. The net turnover during the day was Rs. 53975740.

Source : Equity Bulls

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