GSPL (Q2 FY14)

India Infoline News Service | Mumbai |

OPM at 90.6% came in slightly lower than estimates and were lower by 179bps on yoy basis. Operations and maintenance costs were higher by 188bps yoy while staff costs were lower by 19bps yoy.

CMP Rs60, Target Rs68, Upside 13.3%
  • GSPL reported net revenues of Rs2,774mn (lower than our estimates) which were flat on yoy basis as 26% fall in transmission volumes were offset by 37.3% yoy rise in tariffs. On a sequential basis, revenues were lower by 6.5% as volumes and tariffs were down by 3%+.


  • OPM at 90.6% came in slightly lower than estimates and were lower by 179bps on yoy basis. Operations and maintenance costs were higher by 188bps yoy while staff costs were lower by 19bps yoy.


  • While operating profit in Q2 FY14 was lower by 1.9% yoy, PBT was lower by 7.9% yoy. This was owing to 16.3% yoy surge in interest costs and 26.6% yoy fall in other income. 460bps yoy increase in tax rate led to even higher fall at PAT level of 14.1%. PAT was substantially below our estimates.


  • 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 6.9x FY15 EPS and 0.9x FY15E BV. We maintain our BUY recommendation with a 9-month target price of Rs68.

Cost Analysis
As a % of net sales
Q2 FY14
Q2 FY13
bps yoy
Q1 FY14
bps qoq
Staff costs
1.9
2.0
(19)
2.3
(41)
Operations and maintenance
5.6
3.7
188
5.2
36
Administrative expenses
2.0
1.9
9
1.6
38
Total costs
90.6
92.4
(179)
90.9
(33)
Source: Company, India Infoline Research

Result table
(Rs m)
Q2 FY14
Q2 FY13
% yoy
Q1 FY14
% qoq
Qty processed (mmscmd)
21.6
29.2
(26.0)
22.4
(3.4)
Qty processed (mmscm)
1,947
2,631
(26.0)
2,015
(3.4)
Tariff (Rs/scm)
1.36
0.99
37.3
1.41
(3.2)
Net sales
2,774
2,772
0.1
2,968
(6.5)
Staff costs
(52)
(57)
(9.0)
(67)
(23.5)
Operations and maintenance
(154)
(102)
51.4
(154)
0.0
Other expenses
(56)
(53)
4.6
(48)
15.5
Operating profit
2,513
2,561
(1.9)
2,698
(6.9)
OPM (%)
90.6
92.4
(179) bps
90.9
(33) bps
Depreciation
(470)
(464)
1.2
(458)
2.6
Interest
BSE 203.15 0.20 (0.10%)
NSE 203.00 0.55 (0.27%)

***Note: This is a NSE Chart

 

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