Accumulate GSPL; target of Rs 102: PLilladher

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Accumulate GSPL; target of Rs 102: PLilladher

Prabhudas Lilladher is bullish on Gujarat State Petronet and has recommended accumulate rating on the stock with a target of Rs 102 in its February 10, 2012 research report.

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Prabhudas Lilladher is bullish on Gujarat State Petronet and has recommended accumulate rating on the stock with a target of Rs 102 in its February 10, 2012 research report.

"Gujarat State Petronet (GSPL) reported in-line operational performance for Q3FY12, with sales at Rs2.69bn against our expectation of Rs2.76bn. Transmission volumes declined during the quarter to 32.8mmscmd (35.3mmscmd). EBITDA, during Q3FY12 at Rs2.52bn (-4.0% YoY, -2.6% QoQ), was inline with our estimate of Rs2.53bn. Depreciation was in line with our estimate, while other income was at Rs175m was slightly higher than our estimates. PAT at Rs1.26bn was slightly lower than our assumption of Rs1.3bn."

"In Q3FY12, GSPL recorded 2.0% YoY decline in revenues to Rs2.74bn (Rs2.80m), which was in line with our expectation of Rs2.76m. Transmission volumes, which were at 32.8mmscmd (35.3mmscmd), came in lower than our estimates. Average transmission realization increased by 3.9% YoY to Rs893/'000scm (Rs860/'000scm); same was also slightly higher than our expectation of Rs830/'000scm. GSPL expects improved transmission outlook from Q1FY13 onwards as GSPC has started importing one cargo every month (2.5- 3.0mmsmcd). GSPL also expects improvement in the demand from user industries led by refining segment. It expects to see incremental volumes over normalised volumes from Q1FY13 onwards."

"GSPL's fortunes are highly linked to availability of gas. On account of subdued domestic gas output, GSPL has not been able to deliver the volume growth over the last 7-8 quarters. We believe the domestic natural gas production outlook is unlikely to see a material uptick in the near term, resulting in lack of significant volume growth for GSPL. On the positive, we believe, impending clarity over the transmission tariffs is likely to emerge over the next six months, which is likely to provide upsides in the stock price. We do not ascribe any value to new pipelines bagged by GSPL as there are uncertainties with regards to possible gas source over the same. We recommend an 'Accumulate' on the stock, with a target price of Rs102/share," says Prabhudas Lilladher research report.  

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