Gujarat Gas - Q1 FY22 Earnings Update- Significant Beat - YES Securities

- GUJGA reported a beat on our and street estimates with operating profit of Rs 7.3bn (YES Sec: Rs 5.1bn; Consensus: Rs 5.4bn), primarily on a) marginally (2%) higher than estimated sales volume of 10mmscmd (-17% QoQ) and b) stronger Ebitda margins of INR 7.9/scm (+56% QoQ). While 1Q sales were impacted by Covid Lockdown, but as we write, sales have recovered to 12mmscmd (stand similar to 4QFY21).

Key Highlights

- Profitability -1QFY22: The operating profit and PAT for the quarter stood at Rs 7.2bn (+30% QoQ) and Rs 4.8bn (+36% QoQ), making GUJGA one of the few companies to report sequential improvement in profitability, despite Covid related drop (-17% QoQ) in sales volume. A QoQ 7% lower gas cost on availability of cheaper domestic gas helped GUJGA record better margins

- 1Q Gas sales Mix: Total gas sales stood at 10mmscmd(-17% QoQ), with Industrial at 7.8mmsmcd (-19% YoY); CNG: 1.55mmsmcd (-9% YoY) ; PNG Domestic: 0.6mmscmd (-19% YoY) and PNG commercial at 0.09mmscmd (-21% QoQ)

- GUJGA received 0.7mmscmd of KG-D6 gas from RIL and 1.33 mmscmd of natural gas from Cairn, offsetting the requirement for expensive LNG, which helped in 7% QoQ reduction in gas cost

- Per unit Margins: The Gross spread and EBITDA per unit stood at INR 10.4/scm (4QFY21: 7.0/scm) and INR 7.9/scm(4QFY21: 5.1), respectively, closer to the highs last seen in 2QFY21. A benign moderation in gas cost coupled with benefit of price revision undertaken in Feb'21 flowed in form of stronger EBITDA margins, aiding strong profitability.

- We have currently have an ADD rating on GUJGA

Shares of Gujarat Gas Limited was last trading in BSE at Rs. 772.25 as compared to the previous close of Rs. 770.45. The total number of shares traded during the day was 216516 in over 6654 trades.

The stock hit an intraday high of Rs. 782.8 and intraday low of 759.8. The net turnover during the day was Rs. 167491050.

Source : Equity Bulls

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