Sharekhan's research report on Gujarat Gas
Q3FY23 PAT of Rs. 371 crore (down 8% q-o-q) significantly beat our estimates as EBITDA margin exceeded expectations, offsetting the miss in I-PNG sales volumes. EBITDA margins of Rs. 8.7/scm was 61% above our estimate, reflecting strong gross margin of Rs. 12.8/ scm (marginal decline of only 1% q-o-q) despite price cut for I-PNG. Gas sales volume disappointed with a 4% q-o-q decline to 7.3 mmscmd given continued pressure on I-PNG volume (down 9.4% q-o-q). CNG volumes were up by 5% q-o-q; D-PNG declined by 3% q-o-q. Recent sharp surge in propane prices has narrowed price differential between I-PNG and propane; trends suggests that propane price is likely to be at premium to I-PNG. This trend if sustained bodes well for I-PNG volume recovery for Gujarat Gas (GGAS).
Outlook
GGAS’s valuation of 21x/16x FY24E/FY25E EPS partly factors in volume concerns and we expect volumes/earnings to recovery sharply with likely normalisation of spot LNG prices. We maintain a Buy on GGAS with an unchanged PT of Rs. 560
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
