GUJARAT GAS LTD - Q2 FY 21 RESULTS REVIEW -dt 06 11 20

 

GUJARAT GAS LTD

Q2 FY 21 RESULTS REVIEW

DT 06 11 2010

 

COMPANY OVERVIEW                  

Gujarat Gas is engaged in processing, transmission, and distribution of natural gas. It supplies gas to industrial, commercial and domestic customers.                 

MANAGEMENT                

Anil Mukim           Chairman     

Sanjeev Kumar    Managing Director      

QUARTERLY RESULTS

Gujarat Gas (in Rs. Cr.)	Sep '20	Jun '20	Sep '19	YOY	QOQ
Net Sales	2,559.9	1,082.9	2,512.9	1.87	136.39
FINAL N P T	475.48	59.07	517.03	-8.04	704.94
Equity	137.68	137.68	137.68	0	0
Basic EPS	6.91	0.86	7.51	-7.99	703.49
Raw Materials	1,587.58	729.2	1,955.07	-18.8	117.72
Increase/Decrease in Stocks	-0.02	0.53	-0.07	-71.43	-103.77
Employees Cost	46.84	42.59	44.61	5	9.98
Depreciation	85.62	82.25	80.18	6.78	4.1
Other Expenses	192.49	124.86	142.69	34.9	54.16
P/L Before Other Inc., Int., Excpt. Items & Tax	647.4	103.49	290.43	122.91	525.57
Other Income	20.79	14.92	23.77	-12.54	39.34
P/L Before Int., Excpt. Items & Tax	668.19	118.41	314.2	112.66	464.3
Interest	33.87	40.1	52.76	-35.8	-15.54
P/L Before Tax	634.32	78.31	261.44	142.63	710.01
Tax	159.53	19.63	-255.92	-162.34	712.68
Net Profit/(Loss) For the Period	474.79	58.68	517.36	-8.23	709.12
Share Of P/L Of Associates	0.69	0.39	-0.33	-309.09	76.92

 

MP  302

PE   10.93    

VOLUMES      407000  

52 Wk L/H     189.2     334.65

Market Depth      

BUY 2141.00       

SELL 3636.00             

NaN%          

NaN%          

MONTHLY           

TECHNICAL RATING   

Very Bullish

Valuation

Market Cap (Rs Cr.)           20,737.75

P/E                                    20.38

Book Value (Rs)                 47.8

Dividend (%)                     62.5

Annual Results	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Sales	10,300	7,754	6,174	5,092	6,105
Other Income	83	111	35	26	44
Total Income	10,384	7,865	6,210	5,118	6,150
Total Expenditure	8,984	7,057	5,551	4,606	5,648
EBIT	1,400	790	659	512	501
Interest	192	196	196	208	247
Tax	9	177	171	84	65
Net Profit	1,198	416	291	219	187

      

CASH FLOWS	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Operating Activities	1,419	956	782	700	637
Investing Activities	-466	-603	-430	-458	375
Financing Activities	-502	-349	-270	-251	-1,224
Others	0	0	0	0	0
Net Cash Flow	451	2	81	-8	-211

CASH FLOWS FOR Q2 FY 21 QUARTER

Net Cash from Operating Activities :876.82 cr (699.26)

Net Cash used in Investing : (209.54)    (280.62)

Net Cash used from Financing : (505.30)       (176.43)

NET INCREASE IN CASH+CASH EQUIVALENT :161.98 (242.21)

Closing cash & Cash Equivalents : 711.30 (340.60)

 

 

 

Per Share Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Basic EPS (Rs.)	17.41	6.08	4.25	16.02	13.8
Diluted Eps (Rs.)	17.41	6.08	4.25	16.02	13.8
Book Value [Excl. Reval Reserve]/Share (Rs.)	48.19	32.03	135.56	120.84	110.64
Dividend/Share (Rs.)	1.25	1	4	3	2.5
Face Value	2	2	10	10	10

 

Margin Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Gross Profit Margin (%)	16.68	14.13	15.07	15.11	12.64
Operating Margin (%)	13.59	10.42	10.67	10.05	8.62
Net Profit Margin (%)	11.63	5.37	4.71	4.3	3.07
Return Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Return on Networth / Equity (%)	36.13	18.97	15.66	13.25	12.47
ROCE (%)	22.93	14.74	12.76	10.29	4.47
Return On Assets (%)	15.12	5.84	4.38	3.46	3.13
Liquidity Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Current Ratio (X)	0.79	0.62	0.47	0.38	0.26
Quick Ratio (X)	0.77	0.58	0.43	0.35	0.23
Leverage Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Debt to Equity (x)	0.55	0.95	1.19	1.38	1.12
Interest Coverage Ratios (%)	7.29	4.12	3.36	2.45	2.13
Turnover Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Asset Turnover Ratio (%)	129.96	108.33	92.68	79.87	100.59
Inventory Turnover Ratio (X)	222.66	111.72	108.74	122.27	147.69
Valuation Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
P/E (x)	0	52.75	58.8	18.31	14.08
P/B (x)	4.83	4.63	6.12	6.35	4.97
EV/EBITDA (x)	9.98	10.93	14.51	16.63	11.92
P/S (x)	1.55	1.32	1.85	2.07	1.24
Growth Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
3 Yr CAGR Sales (%)	26.47	8.29	-11.82	1620.47	1727.72
3 Yr CAGR Net Profit (%)	76.18	30.43	-13.09	502.99	472.76

 

HISTORICAL PRICES	THEN	NOW	DIFF
3YR BEF	185	300	62.16
2YR BEF	126.6	300	136.97
1YR BEF	209.4	300	43.27
3M BEF	308.9	300	-2.88

 

Type	Dividend%	Ex-Dividend date
Final	62.5	Sep 09, 2020
Final	50	Sep 12, 2019
Final	40	Sep 18, 2018
Final	30	Sep 20, 2017
Final	25	Sep 21, 2016

 

Share Holding Pattern in (%)
Standalone	Sep-20	Mar-20	Jun-19	Mar-19
Promoters	60.89	60.89	60.89	60.89
Pledged	0	0	0	0
FII/FPI	9.07	9.83	11.94	12.79
Total DII	24.5	23.91	21.91	20.89
Fin.Insts	0	0.18	0.28	0.29
Insurance Co	0.17	0.27	0.75	0.84
MF	7.14	6.58	4.41	2.81
Others DIIs	17.19	16.88	16.47	16.95
Others	5.54	5.37	5.26	5.43
Total	100	100	100	100

 

STRENGTHS

Companies with strong financials

Rising Net Cash Flow and Cash from Operating activity

Strong Annual EPS Growth

RoCE improving in last 2 years

Return on equity (ROE) improving since last 2 year

ROA improving since last 2 year

Strong cash generating ability from core business - Improving Cash Flow from operation for last 2 years

Annual Net Profits improving for last 2 years

Company with Zero Promoter Pledge

NEWS

Gas price revision – Who gains, who loses?

Downward revision in gas prices negative for upstream gas players, but positive for downstream gas marketing companies, fertilisers, tiles and power sectors

Highlights
- Domestic price of natural gas reduced for third consecutive time
- Negative for gas producers like ONGC, Oil India, HOEC
- Positive for downstream gas companies like IGL, MGL, Gujarat Gas
- Fertiliser and ceramic segment to benefit from the move

- Overall impact on inflation would be marginal

For the third consecutive period, the price for domestic natural gas has been revised downwards. For the period of October 2020 – March 2021, there has been nearly a 25 percent downward revision in price from $2.39 per mmbtu to $ 1.79 per mmbtu.

Domestic gas prices are revised bi-annually on 1 April and 1 October each year.

This move is a positive for gas marketing companies like Gujarat Gas.

ANNUAL REPORT 2019-20

The City Gas Distribution (“CGD”) business in India contributes around 17.57% of total natural gas consumption in India and leading the way with the highest CAGR amongst all sectors in the coming decade.

The sector regulator Petroleum and Natural Gas Regulatory Board during the year awarded 50 CGD licenses for the Geographical Areas (GAs) announced during the 10th CGD Bidding Round on 8th November, 2018 covering 124 districts (112 complete and 12 part) in 14 states, 18% of India’s geographical area and 24% of its population.

Your company was awarded 6 new CGD licenses which are:

SIrsa,Fatehabad and Mansa in Haryana and Punjab

Ujjain, Dewas and Indore in MP

Jhabua, Banswara, Ratlam and Dungapur In Rajasthan and MP

Hoshiarpur and Gurdaspur in Punjab

Jalore and Sirohi in Rajasthan

 

Opportunities and Threats :

Similar to any other business, the Company faces challenges in the form of stiff competition from other conventional fossil fuels due to accessibility and availability.

The fuel also faces threat in the form of disparity in the tax structure compared to alternate fuels as PNG and CNG are still out of GST ambit.

Notwithstanding these your Company shall continue to focus placing environmentally clean Natural Gas to affordable markets for sustainable growth.

GGD has 25 CGD licenses and operates in 42 districts, 6 states and 1 UT.

GGD has an expanse of around 1,69,700 square kilometres of licensed area under its umbrella and continues to hold the leadership position of being the largest CGD Company in terms of market share with catering to more than 14.4 lakh residential consumers,over12,600 commercial customers, dispensing CNG from 403 CNG stations for vehicular consumers and providing clean energy solutions to over 3,700 industrial units through its wide spread operations with more than 24,400 kilometres of Natural Gas pipeline network.

In the coming Financial Year it is also expected that the PNGRB shall be announcing the 11th CGD Bidding Round wherein it is likely that many new GAs which are contiguous to your company’s existing CGD operations shall also be included.

This shall give your company another opportunity to expand its foot prints.

The Government is promoting the usages of clean and green fuel, i.e. Piped Natural Gas (“PNG”) and Compressed Natural Gas (“CNG”) by expanding the coverage of CGD network in the country.

In order to promote the natural gas usage in the country, the Government has issued guidelines for making available domestic gas to the CGD entities for meeting the entire requirement of CNG for transport sector and PNG for Domestic.

Your Company has total 25 CGD licenses and operates in 42 districts and six states and one Union territory which accounts to c. 11% of total CGD licenses and c. 10% total Authorized areas issued by PNGRB in India and one transportation pipeline license.

3. SALES AND MARKET PERFORMANCE

Your company has witnessed steep volume growth in industrial customers of around 63% compared to previous year. The volume increase was mainly on account of Ban on usage of Coal Gasifier in the Morbi industrial cluster (which is considered as Ceramic Hub of India) resulting in switchover to natural gas.

This was challenging task technically as well as commercially but your company was able to meet this challenge through concentrated efforts.

For this to happen, your company laid 6 inch steel pipeline of 5 kms in record time of 28 days. However, the last week of the year witnessed drop in volumes on account of lockdown. The volume in commercial category has also grown by around 9% during the fiscal.

Your Company has continued its focused efforts for developing and growing PNG (Domestic) and CNG business.

GGL added more than 93,000 residential customers and erected / commissioned 62 new CNG stations during the year.

Your Company has been able to sustain the volumes with growth of around 6% in the residential sector and around 10% in CNG (transport) sector.

Your company is aggressively planning for penetration in PNG (domestic), PNG (commercial) and CNG (transport) sector which is comparatively less volatile.

Despite the dynamic business environment and intensely competitive energy market; Your Company has been resilient to connect around 329 new industrial units during the year.

GGL has witnessed steep volume growth in industrial customers of around 63% compared to previous year. The volume increase was mainly on account of Ban on usage of Coal Gasifier in the Morbi industrial cluster (which is considered as Ceramic Hub of India) resulting in switchover to natural gas.

This was challenging task technically as well as commercially but your company was able to meet this challenge through concentrated efforts. For this to happen, your company laid 6 inch steel pipeline of 5 kms in record time of 28 days.

However, the last week of the year witnessed drop in volumes on account of lockdown. The volume in commercial category has also grown by around 9% during the fiscal. GGL has continued its focused efforts for developing and growing PNG (Domestic) and CNG business. GGL added more than 93,000 residential customers and erected / commissioned 62 new CNG stations during the year.

GGL has been able to sustain the volumes with growth of around 6% in the residential sector and around 10% in CNG (transport) sector. Your company is aggressively planning for penetration in PNG (domestic), PNG (commercial) and CNG (transport) sector which is comparatively less volatile.

India’s Natural Gas supply and demand outlook is changing. Government of India wants to make India a gas-based economy by boosting domestic production and buying cheap LNG.

India has set a target to raise the share of gas in its primary energy mix to 15% by 2030.

To improve the share of Natural Gas and promote a gas-based and clean fuel economy, the GoI has adopted a systematic approach to focus on all aspects of the gas sector viz upstream, midstream and downstream including CGD network development.

GGL has already adopted digitization of its critical processes and due to that these processes were least impacted during the Covid-19 lockdown period.

Going forward also, your company shall leverage its endeavors for more digitization and aims to set benchmark in the CGD industry for complete E-Office, benefiting all the stakeholders viz. consumers, vendors, suppliers and employees.

The future outlook for natural gas in India depends on the growth in demand, the evolution of the pricing regime, and the pace of gas infrastructure expansion. With outbreak of pandemic COVID-19, the demand for oil & gas has slumped and pulling down the price. The demand will steadily rise with opening of the economy after the pandemic.CGD business like any other business is also exposed to inherent business risks due to internal and/ or external factors. To name a few, the risks could vary from continuous availability of economic gas supplies, pipeline connectivity for expansion in unconnected areas, abundant availability of economical alternate fuels, global economic downturn, crude market volatility, delay in permissions from various statutory bodies for laying the infrastructure etc.

While some of these risks may be beyond the mitigation capability of any company or industry, as a prudent and responsible Company all possible measures are being taken to safe guard the interest of the Company from being impacted due to the above listed risks and concerns.

GGL has been continuously growing and expanding its horizon by venturing into new geographic areas and is committed to reach every possible Natural Gas user across its licensed expanse of around 1,69,700 square kilometres through its ever growing pipeline network spread across 42 districts and six states and one UT. Your Company shall continue to focus on growing the penetration in the current operating areas by increasing the PNG connections and additional CNG stations while tapping the untapped potential by expeditious rollout of distribution network in the newly acquired geographic areas as well. With this focused endeavour GGL shall continue its efforts in providing clean fuel solutions across all operational area to augment an energetic top-line and bottom-line in coming years.