Gujarat Gas: Bottomline up 67% - Views on News from Equitymaster

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Gujarat Gas: Bottomline up 67%

Aug 16, 2011

Gujarat Gas has announced its 2QCY11 results. The company has reported a 41% YoY and 67% YoY growth in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Net sales up 41% YoY during 2QCY11. For the first six months (1HCY11), the net sales increased by 35% YoY.
  • Operating profit registers a growth of 50.2% YoY; operating margins expand by 1.5% (YoY). For the half year, the operating profits registered a growth of 27% YoY while margins were down 1.5% (YoY).The operating margins improved on account of strong topline performance and as raw material prices declined by 1.6% YoY (as a % of sales).
  • Bottomline registers a growth of 67% YoY during the quarter with margins up 2.6% (YoY).This was mainly on account of strong operating performance. The 'other income' was also up 149% YoY during the quarter. For the half year, the bottomline was up 41% YoY.

Consolidated financial snapshot
(Rs m) 2QCY10 2QCY11 Change 1HCY10 1HCY11 Change
Net sales 4,094 5,766 40.9% 8,108 10,969 35.3%
Other operating income 93 85 -8.3% 179 174 -3.2%
Total operating income 4,187 5,852 39.8% 8,287 11,143 34.5%
Expenditure 3,253 4,448 36.8% 6,328 8,652 36.7%
Operating profit (EBDITA) 934 1,403 50.2% 1,960 2,491 27.1%
EBDITA margin (%) 22.8% 24.3%   24.2% 22.7%  
Other income 57 143 149.4% 97 244 152.1%
Interest 3 0 -89.4% 4 1 -80.8%
Depreciation 134 149 11.2% 262 294 12.1%
Profit before tax 854 1,397 63.5% 1,791 2,441 36.3%
Profit before tax margins (%) 20.9% 24.2%   22.1% 22.2%  
Tax 274 431 57.1% 591 752 27.2%
Profit after tax/(loss) 580 966 66.6% 1,200 1,689 40.8%
Net profit margin (%) 14.2% 16.8%   14.8% 15.4%  
Minority share 4 3 -26.0% 7 5 -28.2%
Profit after tax for the Group 576 963 67.3% 1,192 1,684 41.2%
No. of shares (m)         128.25  
Diluted earnings per share (Rs)*         23.9  
Price to earnings ratio (x)*         18.6  
* On the basis of trailing 12 months earnings

What to expect?

At a price of Rs 446, the stock is trading 18.6 times its trailing 12 months earnings. As per the company management, increasing proportion of RLNG (Regasified Liquefied Natural Gas) is a cause of concern on account of high costs.

We are in the process of revising our estimates and will inform the subscribers soon regarding valuations.

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