X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Gujarat Gas: A strong quarter - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Gujarat Gas: A strong quarter
Aug 12, 2013

Gujarat Gas Company Ltd has announced its results for the second quarter of financial year 2013 (2QCY13). During the quarter, the company has reported a 2.5% year on year (YoY) decline in the net sales. In contrast, the net profits for the quarter were up by a whopping 92.8% YoY. Here is our analysis of the results.

Performance summary
  • Net sales for the quarter were down 2.5% on a year on year basis (YoY). For half year ending June 2013 (1HCY13), the net sales grew by 2.0% YoY.
  • Operating profit for the quarter witnessed impressive growth of 86.1% YoY with margins at 20.7% as compared to 10.8% in 2QCY12. For the half year, the operating profits grew by 42.3% YoY with margins at 15.0%, as compared to 10.7% in 1HCY12.
  • Net profits for the group were up by 92.8% YoY during the quarter, with margins at 13.4% as compared to 6.7% in 2QCY12. For the half year, the net profits were up by 36% YoY with margins at 10.5%, as compared to 7.8% in 1HCY12.

Consolidated financial performance snapshot
Rs m 2QCY12 2QCY13 Change 1HCY12 1HCY13 Change
Net Sales 7,659 7,468 -2.5% 14,802 15,097 2.0%
Other operating income 66 45 -31.4% 163 95 -41.7%
Total operating income 7,725 7,513 -2.7% 14,965 15,192 1.5%
Expenditure 6,888 5,957 -13.5% 13,364 12,914 -3.4%
Operating profit (EBDITA) 836 1,556 86.1% 1,601 2,279 42.3%
EBDITA margin (%) 10.8% 20.7%   10.7% 15.0%  
Other income 82 128 56.3% 376 388 3.0%
Interest 0.4 0.5 17.5% 0.81 0.9 9.9%
Depreciation 158 189 19.6% 314 376 19.6%
Profit before tax 760 1,495 96.8% 1,662 2,289 37.7%
Profit before tax margins (%) 9.8% 19.9%   11.1% 15.1%  
Tax 235 489 108.3% 483 688 42.4%
Profit after tax/(loss) 525 1,006 91.6% 1,179 1,601 35.8%
Net profit margin (%) 6.8% 13.4%   7.9% 10.5%  
Minority share 5 3 -43.5% 9 5 -44.1%
Profit after tax for the Group 521 1,004 92.8% 1,170 1,596 36.4%
Group PAT margins (%) 6.7% 13.4%   7.8% 10.5%  
No. of shares (m)         128  
Diluted earnings per share (Rs)*         26  
Price to earnings ratio (x)*         8.7  
*based on trailing 12 months earnings

What has driven performance in 2QCY13?
  • The net sales for the quarter were down by 2.5% YoY. The gas sales volumes during the quarter stood at 239 million standard cubic metres (mmscm) as compared to 264 mmscm in the previous quarter (1QCY13) (down 9.5% QoQ) and 289 mscmd in 2QCY12 (down 17.3% YoY). However, the average realizations on gas sales during the quarter grew by around 17.9% YOY and by 8.1% on a quarter on quarter (QOQ) basis. For half year, the net sales grew by 2.0% YoY. The gas sales volumes for the half year were down 15% YoY while average realizations improved by 20.1% YoY.

  • The operating profits for the quarter were up 86.1% YoY, with operating profit margins improving to 20.7% from 10.8% in 2QCY12 and 9.4% in the preceding quarter. This was mainly due to improvement in realizations, lower share of high cost spot LNG and softening in RLNG costs from the peak levels witnessed in the preceding quarter. As such, EBITDA per scm stood at Rs 6.5 (versus Rs 2.9 per scm in 2QCY12. For half year, the operating profits grew by 42.3% YoY with margins at 15% (versus 10.7% in 1HCY13) on the back of improved realizations and relatively less increase in the gas costs. The EBITDA per scm for the half year stood at Rs 4.5, up 67.5% YoY.

  • The net profits for the quarter grew by 91.6% YoY due to strong performance at the operating level. The growth was further supported by 56.3% YoY increase in the other income. The margins also improved to 13.4% from 6.8% in 2QCY12 and 7.7% in the preceding quarter. For half year, the net profits grew by 35.8% YoY due to improvement in realisations and relatively less hike in gas prices.

    Cost breakup
    Rs m 2QCY12 2QCY13 Change 1HCY12 1HCY13 Change
    Raw material 6,342 5,420 -14.5% 12,296 11,860 -3.5%
    as a % of Sales 82.8% 72.6%   83.1% 78.6%  
    Employee expenses 174 179 2.7% 326 344 5.4%
    as a % of Sales 2.3% 2.4%   2.2% 2.3%  
    Other expenses 373 359 -3.7% 742 710 -4.3%
    as a % of Sales 4.9% 4.8%   5.0% 4.7%  
    Total expenses 6,888 5,957 -13.5% 13,364 12,914 -3.4%
    as a % of Sales 89.9% 79.8%   90.3% 85.5%  
What to expect?

The shortage of gas, volatility in gas price, increasing share of LNG and rupee depreciation remain a key concern for the stock. While the company has reported strong results for the quarter on the back of price hikes and softening in LNG prices, the performance might not be sustainable. Also, further price hikes can dampen the gas demand.

With control of over 73.7% stake, GSPC Distribution Networks Ltd has become the promoter of the company with effect from 12 June, 2013.As the new promoter takes control, the GSPC group's plan and strategy will be important in deciding the fate of the company. At current prices, the stock is trading at around 9 times its trailing twelve earnings. We maintain 'Sell' recommendation on the stock on account of the concerns mentioned above.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

GUJARAT GAS SHARE PRICE


May 26, 2015 (Close)

TRACK GUJARAT GAS

  • Track your investment in GUJARAT GAS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MARKET STATS