Company Report | Q4FY11 Result Update

LONG TERM INVESTMENT CALL

30 May 2011 BUY

Industry Gujarat State Petronet Ltd (GSPL) has come up with numbers below the
CMP (INR) 96.3 Unicon estimates. This is due to the decline in transmission volume (2.4%
Target (INR) 125 YoY) as well as decline in the transmission realisation (3% YoY) in
Upside / Downside (%) 30 Q4FY11.
52 week High/Low (INR) 128/88
54180 During the quarter, GSPL net sales declined by 1.1% YoY in Q4FY11 to
Market Cap (INR Mn)
INR 2,551 mn while on an annual basis the same has increased by 4.8% to
3M Avg. Volumes (000’s) 1,116.8
INR 10,391 mn in FY11. The decrease in revenue was due to the decline in
P/E (FY12e) 10
the transmission volume as well as the decline in the transmission
realisation. In Q4FY11, GSPL has transmitted gas volume of 3,200.24
Shareholding Pattern (%)
MMSCM, 2.4% & 1.6% decline on YoY & QoQ respectively. On an annual
basis the volume of gas transmitted for FY11 has declined by 11.4% YoY
while the transmission realisation declined by 7.4% YoY.

EBITDA for the quarter Q4FY11 stood at INR 2,326 mn, decline of 5.4%
YoY while on annual basis the EBITDA has increased by 3.1% in FY11 to
INR 9,694 mn. EBITDA margin for the quarter Q4FY11 has contracted by
206 bps while on an annual basis it has declined by 133 bps. Decline in
the EBITDA for Q4FY11 was attributed to lower transmission realisation
Stock Performance
along with higher Other-expenditure which has grown by 55% YoY to
120.2 mn.

The company has posted a PAT growth of 40% YoY in Q4FY11 to INR
1,506 mn while for FY11 PAT has increased by 22.4% YoY to INR 5,064
mn. However PAT margin for Q4FY11 has jumped by 1,692 bps YoY to
57% while it has increased by 671 bps on an annual basis to 47% in FY11.
Increase in PAT for the quarter is due to the write back in depreciation.
The company has changed the depreciation rate on gas transmission pipe
lines from 4.75% SLM to 3.17% SLM wef 1st April 2010 which resulted in
increase in PAT of INR 110.1 mn for Q4FY11 and INR 436.3 mn for the
Performance (%) year FY11.
1 Month 3 Months 1 Year
GSPL -6.6 7.0 6.1 Outlook & Valuation
NIFTY -6.1 2.7 9.5
GSPL has planned a capex of INR 18 billion from FY11 to FY13, to
(INR Mn)
increase its current network to 2,400 kms covering the entire Gujarat. It
Particulars Actual Estimates intents to expand outside Gujarat and has submitted an Expression of
Total Income 2,551 2,680 Interest (EOI) for laying four trunk pipelines (together 5,675kms). Two of
EBIDTA 2,326 2,539 these Mehsana-Bhatinda (1,670kms) and Mallavaram-Vijaipur-Bhilwara
Reported PAT 1,506 1,260 (15,85kms) are awarded to GSPL. FY12 is expected to add at least
* Source: Bloomberg, Unicon Research 1,500MW gas based power capacities in Gujarat, which means higher
volumes for GSPL. The company has emerged as the lowest bidder for
three long-distance gas pipelines totalling nearly 4,500 km entailing a
capex of INR 21,500 crore.

At CMP INR 96.3, the company is trading at PE multiples of 10 x of its

FY12e earnings which seems to be at the lower end amongst its peers.
Considering expected new business on the back of higher demand of gas
and GSPL’s capex plan to capture the opportunity, we recommend BUY
on the stock with a price target of INR 125.
Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.
Email: wealthresearch@unicon.in
Standalone Financials (INR Mn)
DESCRIPTION Q4FY11 Q4FY10 YoY FY11 FY10 YoY
Net Sales 2,551 2,579 -1.1% 10,391 9,920 4.8%
Other operating income 29 89 -67.7% 74 89 -16.6%
Net Operating income 2,580 2,668 -3.3% 10,465 10,009 4.6%
Total Expenditure 255 208 22.2% 772 605 27.6%
Operating profit 2,326 2,460 -5.4% 9,694 9,404 3.1%
EBITDA (%) 90% 92% -206bps 93% 94% -133bps
Depreciation -173 632 -127.4% 1,299 2,365 -45.1%
EBIT 2,499 1,827 36.8% 8,394 7,039 19.3%
Other Income 68 32 114.5% 216 159 36.5%
Interest 236 225 4.9% 961 929 3.4%
EBT 2,331 1,634 42.7% 7,650 6,269 22.0%
Tax 825 555 48.5% 2,586 2,131 21.4%
Profit After Tax 1,506 1,079 39.7% 5,064 4,138 22.4%
Net Profit (%) 57% 40% 1692bps 47% 41% 671bps
EPS 2.68 1.92 39.6% 9.00 7.36 22.3%
Source: Company, Unicon Research

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@unicon.in
 Unicon Investment Ranking Methodology

Rating Buy Accumulate Hold Reduce Sell

Return Range >= 20% 10% to 20% -10% to 10% -10% to -20% <= -20%

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@unicon.in
Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.
Email: wealthresearch@unicon.in