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Nirmal Bang Report
Key Points
Gujarat State Petronet Ltd.'s standalone profit after tax missed our estimate by 12% – profit after tax at Rs 2.29 billion versus our estimate Rs 2.59 billion.
Pure Gas Transmission revenue (net of transmission expense and excluding power revenue) came in at Rs 3.84 billion, 12.8% below our estimate and down 6% YoY. The company has pending dues of Rs 131.9 million on tariff settlement under the unified tariff introduced by Petroleum and Natural Gas Regulatory Board from April 2023. Gas volume was down a tad YoY at 29.37 million metric standard cubic metre per day -1.1% below our estimate.
Gross margin per standard cubic metre was 11.9% below our estimate at Rs 1.47 - this will be higher at Rs 1.52 if we add tariff dues. Ebitda margin came in at 76.3%, down 150 bps YoY - 52 bps below our estimate. Unit Ebitda was down 6.3% YoY at Rs 1.26/scm - 12.9% below our estimate.
Ebitda was down by 6.6% YoY at Rs 3.36 billion - 14% below our estimate due to the miss on gross margin per scm and marginal miss on volume.
We have cut FY24E/FY25E by 14%/7.7% due to lower volume and tariff assumptions, as per Q1 FY24 run-rate. We have trimmed SOTP-based target price for Gujarat State Petronet by 6% to Rs 423.
We maintain 'Buy' based on positive policy enablers for gas transmission and healthy long-term outlook for gas demand at 5-6% compound annual growth rate. Gujarat State Petronet also offers value - at current market price its core business is trading at 0.4 times/0.82 times FY23 book (excluding Gujarat Gas Ltd. stake at CMP) with 30%/50% holding company discount.
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