Emkay Global Financial's report on Gujarat Gas
Gujarat Gas reported Q4FY22 EBITDA/APAT of Rs6.97bn/Rs4.53bn (up 26%/30% yoy and ~3x/4x qoq), beating our estimates significantly on the back of a 3.5x qoq jump in EBITDA/scm (almost 50% above est.). Volumes were largely in line with estimates. Total gas sales fell 18% yoy and 13% qoq to 9.9mmscmd. Industrial PNG was down 30% yoy/20% qoq at 6.7mmscmd. CNG was up 30% yoy/3% qoq at 2.2mmscmd. Domestic PNG grew 12% yoy/22% qoq to 0.8mmscmd, while Commercial PNG was flat qoq. Net realization rose 7% qoq, while unit gas cost declined 6%, resulting in an over 2x jump in gross margin to Rs10.7/scm. Unit opex was up 42% yoy/23% qoq at Rs2.8/scm. EBITDA/scm, hence, rose to Rs7.8 (up 55% yoy).
Outlook
We reduce our FY23E/FY24E EPS by 2%/6% as we lower our volume assumption, partly offset by higher margins. We reduce our Mar’23 DCF-based TP by 6% to Rs630/sh, but owing to an attractive valuation amid an improving outlook, we upgrade GGL to Buy/OW.
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