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Gujarat Gas: LNG volumes aid growth - Views on News from Equitymaster

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Gujarat Gas: LNG volumes aid growth
Oct 30, 2009

Performance summary
  • Topline increases by 19%YoY during 3QCY09 on account of higher LNG volumes.
  • EBITDA margins remain flat at 18.3% during the quarter.
  • Other income decreases by 29% during 3QCY09 over the corresponding quarter last year.
  • Bottomline registers a growth of 13% YoY during the period.
  • For 9mCY09, the company registers a growth of 6% in the topline and a decline of 0.2% in the bottomline.


Consolidated financial snapshot
(Rs m) 3QCY08 3QCY09 Change 9mCY08 9mCY09 Change
Net sales 3,191 3,806 19.3% 9,535 10,090 5.8%
Other operating income 55 73 33.5% 169 246 45.8%
Total operating income 3,246 3,879 19.5% 9,704 10,335 6.5%
Expenditure 2,653 3,170 19.5% 7,822 8,309 6.2%
Operating profit (EBDITA) 593 709 19.7% 1,882 2,026 7.7%
EBDITA margin (%) 18.3% 18.3%   19.4% 19.6%  
Other income 86 61 -28.6% 314 203 -35.2%
Interest 0 0 20.1% 1 1 12.3%
Depreciation 105 121 15.0% 312 347 11.3%
Profit before tax 573 650 13.3% 1,883 1,882 -0.1%
Tax 178 203 14.5% 593 594 0.2%
Profit after tax/(loss) 396 446 12.7% 1,290 1,288 -0.2%
Net profit margin (%) 12.2% 11.5%   13.3% 12.5%  
No. of shares (m)         128  
Diluted earnings per share (Rs)*         13  
Price to earnings ratio (x)*         16  
*On trailing 12 months earnings

What has driven performance in 3QCY09?
  • Gujarat gas registered a 19% YoY growth in the topline during 3QCY09 due to the procurement of short term liquefied natural gas (LNG). The company continued to face sourcing problems as supply of Panna Mukta Tapti gas from GAIL was disrupted for 13 days during the quarter. The company resorted to about 0.74 m standard cubic meters per day of gas as a result.

  • On the volumes front, Gujarat gas witnessed an overall increase of 7%. The retail segment posted a strong growth of 18% on account of industrial and CNG business. The CNG business clocked a 11% YoY growth during 3QCY09 as the number of vehicles catered to crossed 100,000.

  • EBIDTA margins stayed flat during 3QCY09 as raw material cost increased by 0.5% (as a percentage of sales) on a YoY basis, while other expenditure declined by 0.5% (as a percentage of sales).
    Cost break-up
    (Rs m) 2QCY08 2QCY09 Change
    Raw materials 2,356 2,835 20.3%
    % sales 72.6% 73.1%  
    Staff cost 103 123 19.2%
    % sales 3.2% 3.2%  
    Other expenditure 194 212 9.5%
    % sales 6.0% 5.5%  
    Total cost 2,653 3,170 49.0%
    % sales 81.7% 81.7%  

  • The company’s completed the allotment of bonus shares at 1:1 during the quarter.

What to expect?
The decline in gas availability from the PMT fields and the new city gas regulations are a cause for concern. However, the company is performing well in industrial retail, where the margins are better than the bulk industrial sales. Also, the CNG business, another high margin segment is expected to have a larger share in the revenue mix of the company going forward.

Gujarat Gas is currently trading at Rs 205 at a price to earnings multiple of 16 times its trailing 12 months earnings. We shall soon update our view on the stock.

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May 26, 2015 (Close)

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