GUJARAT GAS LTD - Q3 FY 21 - RESULTS ANALYSIS

 

GUJARAT GAS LTD

Q3 FY 21 RESULTS ANALYSIS

 

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.)	Dec '20	Sep '20	Dec '19	YOY	QOQ
Net Sales	2886	2560	2564	12.54	12.73
TOTAL EXP	2381	1946	2320	2.66	22.35
Interest	24.32	33.87	46.46	-47.65	-28.2
P B T	523.96	634.32	263.25	99.04	-17.4
Tax	131.78	159.53	66.85	97.13	-17.39
FINAL NPT	392.3	475.48	197.3	98.83	-17.49
Equity Share	137.68	137.68	137.68	0	0
BASIC EPS	5.7	6.91	2.87	98.61	-17.51

MP                449.5

PE                 19.71

VOLUME        8,66,539

FV                 2

52 Week Range    190.5     477

Annual	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Sales	10,300	7,754	6,174	5,092	6,105
Total Expenditure	8,984	7,057	5,551	4,606	5,648
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

 

Performance Highlights - - of the third Quarter ended on 31" December 2020 jQ3 FY21)

Average gas sales volume for the quarter was at 11.44 mmscmd, up by 23% compared to corresponding quarter previous year.

During the current nine months period  ended  on 3Ist December 2020, the Company commercialised 83 new CNG stations. Detail of sales volume for current quarter is as under:

Sales Volumes (in mmscm)   Q3 FY21

Industrial                           843

CNG                                  142

PNG - Domestic                 59

PNG - Commercial             9

Total in mmscm                 1,053

The company's gas sales volume has shown a robust recovery post lockdown.

During the current quarter, in industrial and CNG category, the gas sales volume is up by 29% and 2% respectively compared to corresponding quarter previous year,  and 16% and 20% respectively compared to previous quarter.

On Expenditure side - Raw Material consumption has gone up by 27% and other expenses have gone up by 11.31 % QoQ , which are the causes for reducing the Profit QoQ by over 17% QoQ.

The company currently  continues to flow total gas volume above 11.50 mmscrnd as  against FY20 average sales of 9.44 mmscrnd.

The Company currently has a comfortable liquidity position and prepaid term loans of Rs.988 crore  during the nine months  period ended  on 3Ist December  2020, while continuing to service its debt obligations.

STRENGTHS

• strong financials
• Rising Net Cash Flow and Cash from Operating activity
• Company with high TTM EPS Growth
• 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

• Growth in Quarterly Net Profit with increasing Profit Margin (YoY)
• Increasing Revenue every quarter for the past 2 quarters
• 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
• Recent Results : Growth in Operating Profit with increase in operating margins (YoY)
• Strong Momentum: Price above short, medium and long term moving averages

WEAKNESSES

Decline in Net Profit with falling Profit Margin (QoQ)

OPPORTUNITIES

• Brokers upgraded recommendation or target price in the past three months
• Positive Breakout First Resistance ( LTP > R1)

• Highest Recovery from 52 Week Low
• RSI indicating price strength

Shareholding Pattern

• Promoters holding remains unchanged at 60.89% in Dec 2020 qtr
• Mutual Funds have increased holdings from 7.14% to 7.23% in Dec 2020 qtr.
• Number of MF schemes remains unchanged at 25 in Dec 2020 qtr
• FII/FPI have decreased holdings from 9.07% to 9.01% in Dec 2020 qtr
• Number of FII/FPI investors increased from 206 to 207 in Dec 2020 qtr.
• Institutional Investors have decreased holdings from 16.38% to 16.33% in Dec 2020 qtr

 

 

3 year CAGR growth

Revenue                      26.6%

Net Profit                    75.8%

Operating      Profit      30.0%

TECHNICAL RATING  :  VERY BULLISH

Price Performance

1 Week  18.30% 

1 Month  16.93% 

3 Months       44.65% 

YTD 19.38% 

1 Year    49.01% 

3 Years  164.12%      

Buy Gujarat Gas; target of Rs 475: Emkay Global Financial

Emkay Global Financial is bullish on Gujarat Gas has recommended buy rating on the stock with a target price of Rs 475 in its research report dated February 06, 2021.

Interest cost declined 28% qoq, with net debt down 19% to Rs.7.0bn.

Gas sales volumes grew 16% qoq (23% yoy) to 11.45mmscmd.

Industrial PNG was up 17% qoq (29% yoy) to 9.2mmscmd, with Morbi up 20% to ~7.0mmscmd. On a yoy basis, CNG/Dom. PNG/Comm. PNG was up 2%/up 11%/down 18% to 1.5/0.6/0.1mmscmd.

Net realization fell 3% qoq, while gas cost rose 9%, resulting in a gross margin decline of 24% qoq to Rs.7.8/scm (an 18% beat though). Opex/scm fell 10% qoq to Rs.1.9 (down 12% yoy and 12% below est.). EBITDA/scm came in at Rs5.8, down 28% qoq/up 35% yoy.

Outlook

We raise FY21/22/23E EPS by 14%/16%/13%, building in 5-7% higher volumes as well as EBITDA/scm each, based on strong run-rate and management guidance. We increase our DCF-based TP by 27% to Rs475 with a lower 10% WACC. Retain Buy with OW.

Buy Gujarat Gas; target of Rs 505: ICICI Direct

ICICI Direct is bullish on Gujarat Gas has recommended buy rating on the stock with a target price of Rs 505 in its research report dated February 09, 2021.

Gujarat Gas’ Q3FY21 results were better than our estimates on all fronts.

Revenues increased 12.9% YoY at Rs 2829.4 crore (our estimate: Rs 2608.5 crore) as sales volume jumped 22.9% YoY during the quarter. Sales volume at 11.4 mmscmd was above estimate of 10.6 mmscmd.

Realisation was at Rs 26.9/scm (our estimate: Rs 26.7/scm).

Higher-than-expected realisation coupled with lower gas costs led to increase in gross margins that improved by Rs 1.2/scm YoY to Rs 7.8/scm (our estimate: Rs 7.3/scm).

EBITDA was at Rs 614.8 crore, up 65.9% YoY (our estimate: Rs 476.4 crore).

Subsequently, PAT increased 99.5% YoY to Rs 392.2 crore (our estimate: Rs 280.1 crore).

Outlook

We roll over valuations to FY23 and maintain BUY on the stock with a revised TP of Rs 505 (21x FY23E EPS) (earlier Rs 400/share).