GSPL (Q3 FY13)

India Infoline News Service | Mumbai |

GSPL reported net revenues of Rs2,661mn (in line with our estimates) which were down 3.4% yoy and 4% qoq on back of continued drop in transmission volumes.

CMP Rs68, Target Rs80, Upside 17.5%

  • GSPL reported net revenues of Rs2,661mn (in line with our estimates) which were down 3.4% yoy and 4% qoq on back of continued drop in transmission volumes. The quarter saw volumes decline to 27.9mmscmd from 33.5mmscmd in Q3 FY12 on back of continuous fall being observed in KG D6 gas production. However, despite the 17% yoy fall in transmission volumes the revenue fall was observed to be moderate on back of the take or pay contracts. The computed tariffs (facility charge + tariffs) for the quarter were seen at Rs1.04/scm, 15.8% higher yoy and 4.9% higher qoq.

  • OPM at 90% came in lower than our estimates on back of unexpected rise in employee costs (as % of sales) which were seen higher by 172bps yoy and 138bps qoq. Operating profit for the quarter recorded a decline of 4.7% yoy and 6.5% qoq. In the gas transportation segment, EBIT margins were noted at 78%, down by 350bps yoy and 240bps qoq.   

  • On back of a slightly weak operating performance, PAT at Rs1,190mn came in below our expectations. 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 7.2x FY15 EPS. We maintain our BUY recommendation with a revised 9-month target price of Rs80.

Cost Analysis
As a % of net sales Q3 FY13 Q3 FY12 bps yoy Q2 FY13 bps qoq
Staff costs 3.4 1.7 172 2.0 138
Operations and maintenance 4.4 4.1 26 3.7 72
Administrative expenses 2.2 3.0 (79) 1.9 31
Total costs 90.0 91.1 (119) 92.4 (241)
Source: Company, India Infoline Research

Result table
(Rs m) Q3 FY13 Q3 FY12 % yoy Q2 FY13 % qoq
Qty processed (mmscmd) 27.9 33.5 (16.8) 29.2 (4.7)
Qty processed (mmscm) 2,508 3,015 (16.8) 2,631 (4.7)
Tariff (Rs/scm) 1.04 0.90 15.8 0.99 4.9
Net sales 2,661 2,755 (3.4) 2,772 (4.0)
Staff costs (91) (47) 94.1 (57) 61.0
Operations and maintenance (117) (114) 2.7 (102) 14.8
Other expenses (59) (83) (28.7) (53) 11.4
Operating profit 2,394 2,511 (4.7) 2,561 (6.5)
OPM (%) 90.0 91.1 -119 bps 92.4 -241 bps
Depreciation (478) (460) 3.8 (464) 2.9
Interest (314) (325) (3.3) (316) (0.4)
Other income 175 158 10.7 185 (5.8)
PBT 1,776 1,884 (5.7) 1,966 (9.7)
Tax (586) (623) (5.8) (638) (8.2)
Effective tax rate (%) 33.0 33.1   32.5  
PAT 1,190 1,261 (5.7) 1,328 (10.4)
PAT margin (%) 44.7 45.8 -106 bps 47.9 -319 bps
Ann. EPS (Rs) 8.5 9.0 (5.7) 9.4 (10.4)
Source: Company, India Infoline Research

Financial Summary
Y/e 31 Mar (Rs m) FY12 FY13E FY14E FY15E
Revenues 11,233 10,768 11,096 11,169
yoy growth (%) 7.3 (4.1) 3.1 0.7
Operating profit
BSE 208.30 [1.70] ([0.81]%)
NSE 208.00 [1.50] ([0.72]%)

***Note: This is a NSE Chart

 

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