LKP neutral on Gujarat State Petronet

LKP's report on Gujarat State Petronet (GSPL)

"GSPL’s reported results for the quarter were significantly higher than our estimate due to one off of Rs0.9bn for retrospective adjustment in tariffs from 27th July 2012 till date as per revised PNGRB orders. Adjusting for this, the results were marginally lower than our estimate. Adjusted transmission tariff for the quarter declined by 17.9% yoy (qoq +4.1%) to Rs1.12.scm which was 6.6% lower than our estimate of Rs1.2/scm. GSPL’s volumes for the quarter increased by 14.4% qoq to 24.2mmscmd (qoq +10.1%) which was inline with our estimate. Increase in transmission volume was driven by increased demand as LNG prices softened during the quarter. GSPL’s reported revenue increased by 26.7% yoy to Rs3.5bn while reported operating profit was Rs3.2bn. Adjusted PAT for the quarter of Rs1.11bn (reported PAT Rs1.7bn) was marginally lower than our estimate of Rs1.18bn."

"We revise our rating on the stock to NEUTRAL with a price target of Rs 98. At the CMP, the stock is trading at 10.8x and 5.0x FY16e EPS and EBITDA respectively", says LKP research report.

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