GSPL (Q1 FY14)

India Infoline News Service | Mumbai |

GSPL reported net revenues of Rs2,968mn (higher than our estimates) which were higher by 9.9% yoy but down 17.5% qoq.

CMP Rs54, Target Rs68, Upside 25.9%

  • GSPL reported net revenues of Rs2,968mn (higher than our estimates) which were higher by 9.9% yoy but down 17.5% qoq. The yoy rise in revenues was in spite of 28.9% yoy fall in transmission volumes (continued decline in gas production at KG-D6 field) to 22.4mmscmd. This was owing to 56.4% yoy jump in computed tariffs. The tariffs were at Rs1.4/scm as full effect of PNGRB tariff revision was seen in this quarter along with higher proportion of take or pay contracts.


  • OPM at 90.9% came in line with our estimates but were lower by 129bps on yoy basis. Staff costs were higher by 65bps and operations & maintenance costs rose 83bps yoy as a percentage of net sales. However, 19bps yoy decline in administrative expenses partially offset the impact.


  • While operating profit in Q1 FY14 was higher by 8.4% yoy, PBT was higher by only 5.7% yoy. This was owing to 4.2% yoy increase in depreciation (additional capitalization of new pipelines), 19.7% jump in interest costs (higher debt) and 13% yoy fall in other income. 290bps yoy increase in tax rate led to even lower growth at PAT level of 1.1%.


  • While the volumes continue to show weakness and are not expected to revive in near term, the take or pay contracts will continue to support the topline going ahead. In the medium term, a favourable LNG price scenario (on back of new import facilities and opening up of LNG markets) will aid volume growth. Additionally we expect the cross country pipeline project helping the company to significantly expand the business beyond Gujarat. We note, at current price levels the stock trades a cheap 6.4x FY15 EPS and 0.8x FY15E BV. We maintain our BUY recommendation with a revised 9-month target price of Rs68.

Cost Analysis
As a % of net sales
Q1 FY14
Q1 FY13
bps yoy
Q4 FY13
bps qoq
Staff costs
2.3
1.6
65
1.5
73
Operations and maintenance
5.2
4.4
83
4.9
27
Administrative expenses
1.6
1.8
(19)
2.5
(86)
Total costs
90.9
92.2
(129)
91.1
(14)
Source: Company, India Infoline Research

Result table
(Rs m)
Q1 FY14
Q1 FY13
% yoy
Q4 FY13
% qoq
Qty processed (mmscmd)
22.4
31.5
(28.9)
22.2
1.1
Qty processed (mmscm)
2,015
2,833
(28.9)
1,994
1.1
Tariff (Rs/scm)
1.41
0.90
56.4
1.76
(20.1)
Net sales
2,968
2,700
9.9
3,598
(17.5)
Staff costs
(67)
(44)
53.8
(55)
21.8
Operations and maintenance
(154)
(118)
30.8
(177)
(13.0)
Other expenses
(48)
(49)
(1.8)
(89)
(46.1)
Operating profit
2,698
2,490
8.4
3,276
(17.7)
OPM (%)
90.9
92.2
(129) bps
91.1
(14) bps
Depreciation
(458)
(439)
4.2
(480)
(4.6)
BSE 208.30 [1.70] ([0.81]%)
NSE 208.00 [1.50] ([0.72]%)

***Note: This is a NSE Chart

 

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