GAIL (India) Ltd (Q1 FY13)

India Infoline News Service | Mumbai |

Net sales rise 25% yoy on the back of higher revenues in the natural gas trading and LPG & liquid hydrocarbon segment

CMP Rs356, Target Rs366, Upside 2.8%

  • Net sales rise 25% yoy on the back of higher revenues in the natural gas trading and LPG & liquid hydrocarbon segment

  • Natural gas transmission volumes fall 6.3% yoy and 5% qoq on the back of falling natural gas production at the KG-D6 field

  • OPM declines 44bps yoy to 17.3% but registered a sequential increase of 998bps; sequential improvement was on the back of one time provisions for the tariff cuts made in Q4 FY12

  • Amongst segmental EBIT margins, gas transmission and petchem segments witnessed declines while LPG transmission, Natural gas trading and LPG & liquid hydrocarbons saw an increase

  • Subsidy burden was at Rs7bn, which was lower than our estimates

  • Downgrade to Market Performer but maintain 9-month target price of Rs366

Result table
(Rs m) Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Net sales 111,120 88,890 25.0 104,884 5.9
Material costs (5,956) (5,788) 2.9 (6,263) (4.9)
Purchases (77,242) (59,349) 30.1 (77,391) (0.2)
Personnel costs (1,636) (1,716) (4.6) (531) 208.2
Other overheads (7,061) (6,266) 12.7 (13,023) (45.8)
Operating profit 19,225 15,772 21.9 7,677 150.4
OPM (%) 17.3 17.7 (44) bps 7.3 998 bps
Depreciation (2,169) (1,782) 21.7 (2,143) 1.2
Interest (588) (208) 182.7 (523) 12.3
Other income 378 647 (41.5) 2,299 (83.6)
PBT 16,846 14,429 16.8 7,309 130.5
Tax (5,508) (4,582) 20.2 (2,476) 122.5
Effective tax rate (%) 32.7 31.8   33.9  
Reported PAT 11,338 9,846 15.1 4,833 134.6
PAT margin (%) 10.2 11.1 (87) bps 4.6 559 bps
Ann. EPS (Rs) 35.8 31.0 15.1 15.2 134.6
Source: Company, India Infoline Research

Segmental revenue performance
Revenues (Rs mn) Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Natural Gas transmission 9,152 9,389 (2.5) 8,463 8.1
LPG transmission 1,136 1,142 (0.5) 1,086 4.6
Natural Gas Trading 92,421 72,054 28.3 91,213 1.3
Petrochemicals 5,741 6,369 (9.9) 9,629 (40.4)
LPG and Liquid Hydrocarbons 10,723 8,138 31.8 3,223 232.8
Source: Company, India Infoline Research

Strong revenue growth in spite of fall in volumes

Gail (India) Ltd reported net sales of Rs111bn, an increase of 25% yoy. Sales were in line with estimates. Growth in the topline was driven by 28.3% and 31.8% yoy jump in revenues of natural gas trading and LPG & liquid hydrocarbon segment. For natural gas transmission, volumes were lower by 6.3% on the back of decline in KG-D6 production. For LPG transmission, although volumes were higher, realizations were on the lower side. Higher LNG prices and rupee depreciation resulted in strong topline growth for the natural gas trading segment. Petrochemicals segment disappointed with a 25% yoy fall in sale volumes on the back of weak demand environment for polymers in the domestic market.


Lower subsidy burden translates into improved performance for LPG segment

For Q1 FY13, GAIL accounted for a subsidy share of Rs7,000mn as compared to Rs13,980mn in Q4 FY12 and Rs6,819mn in Q1 FY12. The provisioning was lower than our estimates. As a result, the realizations for the LPG & Liquid Hydrocarbon segment rose by 43% on yoy basis and the EBIT margins of the segment jumped 12.7 percentage points on yoy basis.


Operational performance
  Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Natural Gas transmission (mmscmd) 109.8 117.2 (6.3) 115.6 (5.0)
LPG transmission ('000 MT) 845.0 817.0 3.4 879.0 (3.9)
Natural Gas Trading (mmscmd) 83.2 82.6 0.6 85.5 (2.7)
Petrochemicals ('000 MT) 66.0 88.0 (25.0) 118.0 (44.1)
LPG ("000 MT) 255.0 268.0 (4.9) 275.0 (7.3)
Liquid Hydrocarbons ('000 MT) 67.0 81.0 (17.3) 76.0 (11.8)
Source: Company, India Infoline Research

OPM falls 44bps yoy but jumps 998bps sequentially

BSE 481.60 [0.95] ([0.20]%)
NSE 481.65 [0.85] ([0.18]%)

***Note: This is a NSE Chart

 

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