Gujarat State Petronet
Estimate changes
TP change
Rating change
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8 June 2020
4QFY20 Results Update | Sector: Oil & Gas
CMP: INR221
TP: INR300 (+36% )
LNG terminal capacity to underpin volume growth
Buy
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
GUJS IN
564
124.9 / 1.6
263 / 146
6/16/33
130
Financials & Valuations (INR b)
Y/E March
2020 2021E 2022E
Sales
19.4 20.6 22.9
EBITDA
15.7 16.7 18.4
PAT
11.1 10.2 11.2
EPS (INR)
19.7 18.0 19.9
EPS Gr. (%)
39.5 -8.3 10.4
BV/Sh.(INR)
119.2 134.8 152.3
Ratios
Net D:E
-0.6 -0.7 -0.7
RoE (%)
17.8 14.2 13.9
RoCE (%)
17.5 14.8 14.4
Payout (%)
12.2 13.3 12.1
Valuations
P/E (x)
11.4 12.4 11.3
P/BV (x)
1.9
1.7
1.5
EV/EBITDA (x)
8.3
7.3
6.0
Div. Yield (%)
0.9
0.9
0.9
FCF Yield (%)
11.5
8.6 10.6
Lower-than-expected volumes and implied tariff led to an EBITDA miss, while
lower tax rate helped GSPL’s PAT (in-line) during 4QFY20. The QoQ volume decline
was primarily led by lower gas offtake from various fertilizer and refining/petchem
units due to the nationwide COVID-19 led lockdowns.
Despite the COVID-19 impact, FY20 transmission volumes were up 9% YoY to
37.8mmscmd with implied tariff at INR1,379/scm (v/s INR1,455/scm in FY19).
The company is a direct beneficiary of the (a) upcoming LNG terminals in Gujarat
(the state tops India’s gas energy mix at 25%), and (b) renewed focus on reducing
industrial pollution by the NGT (Gujarat has five geographical areas (GAs)
identified as severely/critically polluted – like Morbi).
There are concerns over tariff reduction for the company, in line with the revised
new tax rate and over-utilization of the pipeline. However, the increase in capex
(due to capacity expansion) should ensure lesser impact on its tariff. We maintain
Buy
on the stock.
Transmission volume for the quarter stood at 36.8mmscmd (-6% est., +14% YoY),
with Implied tariff at INR1,284/scm (-8% est., -12% YoY).
Thus, net sales came in at INR4.4b (+1% YoY) and EBITDA at INR3.6b (+8% YoY),
both lower than est. by 8% for the quarter.
Lower interest rate led to PBT of INR2.8b. Tax rate for the quarter was lower at
19.3%, clocking in-line PAT at INR2.3b (+47% YoY).
For FY20, EBITDA was up 2% YoY at INR15.8b with PBT at INR12.8b (+6% YoY). Tax
rate for the year stood at 13.3%, resulting in PAT of INR11.1b (+40% YoY).
The company had written back tax in the previous quarter as it moved to the new
lower tax regime.
Growth in volumes were led by CGD growing +36% YoY to 11mmscmd (+3% QoQ)
and Power growing +89% YoY to 5.5mmscmd (-7% QoQ).
Refinery/Petchem volumes declined 11% YoY to 10.7mmscmd (-10% QoQ), along
with fertilizer volumes at -13% YoY to 3.7mmscmd (-9% QoQ).
Others stood at 5.5mmscmd (+14% YoY, +36% QoQ).
The company is envisaging enhancement of its capacity in lieu of the upcoming
LNG terminals in Gujarat.
Apart from the recently commissioned Mundra LNG terminal (which is currently
running at 3.5mmtpa out of 5mmmtpa), Swan Energy (Jafrabad-FSRU) and HPCL-
Shapoorji (Charra LNG terminal) are expected to come up with 5mmtpa capacity
each over the next 2-3 years.
Apart from this, Petronet LNG is also expanding its Dahej LNG terminal by
2mmmtpa to 19.5mmtpa, which should be completed in another two years.
EBITDA miss led by lower volumes and tariff
Key operational highlights – Strong volume growth in CGD continues
Shareholding pattern (%)
As On
Mar-20 Dec-19 Mar-19
Promoter 37.6
37.6
37.6
DII
33.9
33.9
32.0
FII
15.8
15.9
16.5
Others
12.7
12.6
13.9
FII Includes depository receipts
Valuation and view
Swarnendu Bhushan- Research Analyst
(Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529
Sarfraz Bhimani - Research Analyst
(Sarfraz.Bhimani@MotilalOswal.com); +91 22 6129 1566
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
3 September 2019
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