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| India Infoline Research Team / 11:54 , Aug 10, 2011 |
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CMP Rs103, Target Rs114, Upside 10.7%
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GSPLreported a 13% yoy growth in net sales driven by 1.2% higher transmissionvolumes to 37.2mmscmd in Q1 FY12 compared to 36.7mmscmd in Q1 FY11.Transmission tariffs were higher by 6.4% yoy and 2.9% qoq.
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OPMwas lower by 241bps yoy to 92.2% owing to overall increase in costs. However,on a sequential basis, OPM improved 209bps owing to sharp fall inadministrative expenses.
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Depreciationwas lower by 34.1% yoy due to change in depreciation policy on pipelines from8.33% straight line method (SLM) to 3.17% SLM. Other income was higher by 163%.However, these gains were offset by 44% increase in interest costs on accountof increase in the debt levels.
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Withtax rate declining by 140bps yoy, PAT jumped by 30.7% yoy as compared to 10.1%increase in operating profit.
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Goingahead, we see strong visibility in volumes and limited downside to tariffs forGSPL. We are factoring in transmission volumes of 38mmscmd and 42mmscmd in FY12and FY13 respectively. We expect the tariffs to remain at the current levels inthe medium term. We maintain our BUY recommendation with a target price ofRs114.
Results table
|
(Rs m) |
Q1 FY12 |
Q1 FY11 |
% yoy |
Q4 FY11 |
% qoq |
|
Transmission vol (mmscm) |
3,345 |
3,304 |
1.2 |
3,200 |
4.5 |
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Tariff (Rs/unit) |
0.81 |
0.76 |
6.4 |
0.79 |
2.9 |
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Net sales |
2,876 |
2,545 |
13.0 |
2,580 |
11.5 |
|
Staff costs |
(56) |
(26) |
118.4 |
(45) |
25.9 |
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Operations and maintenance |
(109) |
(82) |
32.9 |
(90) |
20.9 |
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Administrative expenses |
(59) |
(29) |
101.4 |
(120) |
(51.0) |
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Operating profit |
2,652 |
2,408 |
10.1 |
2,326 |
14.1 |
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OPM (%) |
92.2 |
94.6 |
(241) bps |
90.1 |
209 bps |
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Depreciation |
(453) |
(687) |
(34.1) |
173 |
(361.5) |
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Interest |
(324) |
(224) |
44.4 |
(236) |
37.3 |
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Other income |
79 |
30 |
163.2 |
68 |
15.3 |
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PBT |
1,954 |
1,527 |
28.0 |
2,331 |
(16.2) |
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Tax |
(581) |
(476) |
22.1 |
(825) |
(29.6) |
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Effective tax rate (%) |
29.7 |
31.2 |
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35.4 |
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Reported PAT |
1,374 |
1,051 |
30.7 |
1,506 |
(8.8) |
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PAT margin (%) |
47.8 |
41.3 |
647 bps |
58.4 |
(1,062) bps |
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Ann. EPS (Rs) |
9.8 |
7.5 |
30.7 |
10.7 |
(8.8) |
Source:Company, IndiaInfoline Research
Financial summary
|
Y/e 31 Mar (Rs m) |
FY10 |
FY11 |
FY12E |
FY13E |
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Revenues |
10,009 |
10,465 |
11,096 |
12,264 |
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yoy growth (%) |
105.3 |
4.6 |
6.0 |
10.5 |
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Operating profit |
9,414 |
9,694 |
10,351 |
11,440 |
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OPM (%) |
94.1 |
92.6 |
93.3 |
93.3 |
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Pre-exceptional PAT |
4,138 |
5,064 |
5,339 |
5,929 |
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yoy growth (%) |
235.3 |
22.4 |
5.4 |
11.1 |
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EPS (Rs) |
7.4 |
9.0 |
9.5 |
10.5 |
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P/E (x) |
14.0 |
11.4 |
10.9 |
9.8 |
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Price/Book (x) |
3.7 |
2.9 |
2.3 |
1.9 |
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EV/EBITDA (x) |
7.3 |
7.3 |
6.8 |
6.2 |
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Debt/Equity (x) |
0.8 |
0.7 |
0.5 |
0.5 |
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RoE (%) |
29.8 |
28.4 |
23.8 |
21.6 |
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RoCE (%) |
26.5 |
25.6 |
23.2 |
23.3 |
Source:Company, IndiaInfoline Research
WarmRegards,
India Infoline Research Team
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