GSPL (Q1 FY13)

India Infoline News Service | Mumbai |

GSPL reported Q1 FY13 net sales at Rs2.7bn (in line with our expectations) which indicated a decline of 6% yoy and 3% on qoq basis.

CMP Rs72, Target Rs85, Upside 18.1%

  • GSPL reported Q1 FY13 net sales at Rs2.7bn (in line with our expectations) which indicated a decline of 6% yoy and 3% on qoq basis. The volumes processed were flat over the previous quarter but saw a dip of 15.3% over the corresponding quarter last year. The sharp dip on yoy basis was primarily on back of lower gas production from KG D6. Transmission volumes were at 31.5mmscmd as compared to 37.2mmscmd in Q1 FY12.

  • The decline in net sales was arrested to some extent by 11% yoy increase in network tariffs. Computed tariffs were at Rs0.90/scm as compared to Rs0.81/scm in Q1 FY12. Increase in tariffs could be on account of take or pay contracts getting triggered.

  • In line with our estimates, the OPM remained flat on yoy basis as the rise in operations and maintenance costs was offset by lower employee and other overheads. On a sequential basis, OPM improved by 93bps on account of lower other overheads incurred.

Cost Analysis
As a % of net sales Q1 FY13 Q1 FY12 bps yoy Q4 FY12 bps qoq
Staff costs 1.6 1.9 (29) 1.6 3
Operations and maintenance 4.4 3.8 59 3.8 53
Other overheads 1.8 2.1 (27) 3.3 (150)
Total costs 92.2 92.2 (3) 91.3 93

  • Other income almost doubled to Rs151mn and helped limit the PAT de-growth. For the gas transportation segment the EBIT margin declined by 140bps.

  • We have seen flat volumes over the trailing quarter and we do not expect any positive surprises in volumes in the near term. However we believe there will be a robust growth in volumes in medium to longer term as LNG prices cool off and the new terminals shape up. Moreover recent financial closures by the SPV (GSPL India Transco Ltd & GSPL India Gasnet Ltd) and the recent award of the pipeline contract by GITL is an indicator of progress being made on the cross country pipeline project. At P/E of 6.9x FY14E EPS we find the valuations attractive and thereby maintain our BUY recommendation with a 9-month target price of Rs85.

Results table
(Rs m) Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Qty processed (mmscm)   2,833   3,345   (15.3)   2,830   0.1
Tariff (Rs/unit)   0.90   0.81   10.9   0.96   (5.7)
Net sales   2,700   2,876   (6.1)   2,788   (3.1)
Staff costs   (44)   (55)   (20.4)   (44)   (1.1)
Operations and maintenance   (118)   (109)   8.6   (107)   10.3
Other expenses   (49)    (60)   (18.2)   (92)   (46.9)
Operating profit   2,490   2,652   (6.1)   2,544   (2.1)
OPM (%) 92.2 92.2  (3) bps 91.3  93 bps
Depreciation   (439)   (453)   (2.9)   (466)   (5.7)
Interest   (317)   (324)   (2.0)   (316)   0.4
Other income   151   79   92.6   140   7.7
PBT   1,884   1,954   (3.6)   1,902   (1.0)
Tax   (636)   (581)   9.4   (610)   4.3
Effective tax rate (%) 33.7 29.7   32.0  
PAT   1,248   1,374   (9.1)   1,293    (3.4)
PAT margin (%) 46.2 47.8 (153) bps 46.4 (14) bps
Ann. EPS (Rs) 8.9 9.8   (9.1) 9.2   (3.4)
Source: Company, India Infoline Research

Financial summary
Y/e 31 Mar (Rs m) FY11 FY12E FY13E FY14E
Revenues 10,465 11,233 11,169 12,483
yoy growth (%) 4.6 7.3 (0.6) 11.8
Operating profit 9,694 10,298 10,247 11,465
OPM (%) 92.6 91.7 91.7 91.8
Reported PAT 5,064 5,221 5,109 5,984
yoy growth (%) 22.4 3.1 (2.1)
BSE 203.15 0.20 (0.10%)
NSE 203.00 0.55 (0.27%)

***Note: This is a NSE Chart

 

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