Gujarat Gas - Q2FY21 Result Update - ICICI Direct

Gujarat Gas' Q2FY21 results were better than our estimates on all fronts. Revenues were flat YoY at Rs. 2513 crore (our estimate: Rs. 2231.6 crore) due to growth of 5.5% YoY in sales volume during the quarter. Sales volume at 9.8 mmscmd was above estimate of 9.1 mmscmd. Realisation was at Rs. 27.7/scm (our estimate: Rs. 26.7/scm). Higher-than-expected realisation coupled with lower gas costs led to increase in gross margins, which improved by Rs. 3.7/scm YoY and Rs. 0.8/scm QoQ to Rs. 10.2/scm (our estimate: Rs. 7.6/scm). EBITDA was at Rs. 733 crore, up 97.8% YoY (our estimate: Rs. 427.7 crore). Subsequently, PAT declined 8.2% YoY to Rs. 474.8 crore (our estimate: Rs. 234.9 crore) as the company had negative tax outgo in the base quarter.

Valuation & Outlook

Sales volumes have seen sharp growth post lockdown and are currently at 10.5 mmscmd. We expect growth momentum in industrial PNG segment to continue and build in volume growth in CNG segment from Q4FY21E onwards. In the long term, rise in volumes driven by regulatory tailwinds, further penetration in existing geographical areas (GAs) and aggressive expansion in newly acquired Gas will lead to sustainable growth. We maintain BUY on Gujarat Gas with a revised TP of Rs. 360 (19x FY22E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GujaratGas_Q2FY21.pdf

Shares of Gujarat Gas Ltd was last trading in BSE at Rs.309.45 as compared to the previous close of Rs. 305.5. The total number of shares traded during the day was 10538 in over 407 trades.

The stock hit an intraday high of Rs. 310.3 and intraday low of 308.25. The net turnover during the day was Rs. 3257879.

Source : Equity Bulls

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