September 21, 2016 / 16:43 IST
KR Choksey's research report on GSPL
Gujarat State Petronet Ltd. reported revenue of INR. 2,581 mn up 11.3% QoQ and down 0.4% YoY due to higher transmission volume QoQ. EBITDA was also up 13.9% QoQ and 2.7% YoY at INR 2,333 mn due to higher revenues, lower operation and maintenance expenses and lower other expenses. Profit stood at INR. 1,212 mn (higher due to higher other income and lower depreciation) up 21.6% on QoQ and 7.5% on YoY basis. Transmission volumes stood at 25.1 mmscmd which was up 2.9% QoQ and 3.7% YoY. Implied tariff was higher 8.3% QoQ and down 3.0% on a YoY basis to INR 1,127/mscm.
We remain positive on the stock considering the following trigger points. 1- ONGC to enhance domestic production by 10‐15mmscmd over 1‐3 years. 2- CBM production is poised to grow by 6‐8mmscmd over 2‐3 years. 3- Commissioning of Mundra terminal by FY18. We model transmission tariff at INR 1120 and 1150 mscm and volumes at 25.8 and 26.5 mmscmd for FY17/18. We assign ‘ACCUMULATE’ rating on the stock with the target price of INR 158.5/share based on the mix of EV/EBITDA, P/E and DCF methodology. Currently Stock trades at 16.5x FY18E EPS of INR 9.0.
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