GUJARAT GAS

FUNDAMENTAL ANALYSIS
 BRIEF HISTORY OF THE COMPANY

• Gujarat Gas Limited (formerly known as GSPC Distribution Networks

Limited),is India's largest city gas distribution player with presence
spread across 22 Districts in the State of Gujarat and Union Territory of
Dadra Nagar Haveli andThane GA which includes Palghar district of
Maharashtra.

• The company has India's largest customer base in major user segments.
Gujarat Gas Company Limited (GGCL) was incorporated in 1980, and is
in the business of procurement and distribution of natural gas.

• In October 2012, the majority owner in the firm, BG Group, sold its
65% stake for a fee of around $470 million.
 BUSINESS OVERVIEW

• Gujarat Gas Limited is committed to reach out to every possible natural

gas user in its expanded geographical area.

• The size and scale of the combined entity gives it the ability to achieve
efficiencies and effectively manage the transformational changes in the
sector. This major gain in productivity would benefit all the key
stakeholders, i.e. Customers and Shareholders.

• The company has around 22,000 km of gas pipeline network. It has 291
CNG stations and provides close to 6.0 mmscmd of Natural Gas to over
12.5 Lakh households, approximately 6 lakh vehicles and to 3250
industrial customers.
 SECTOR OVERVIEW

• The oil and gas sector is among the six core industries in India.
• The Government of India has adopted several policies to fulfil the
increasing demand.
• The country's gas production is expected to touch 90 Billion Cubic
Metres (BCM) in 2040 from 21.3 BCM in 2017-2018 (Apr-Nov). Gas
pipeline infrastructure in the country stood at 16,470 km in September
2017.
• India’s oil demand is expected to grow at a CAGR of 3.6 per cent to
458 Million Tonnes of Oil Equivalent (MTOE) by 2040, while demand
for energy will more than double by 2040 as economy will grow to
more than five times its current size.
PORTER’S FIVE FORCES ANALYSIS
 Customers have low/non existent
Competitive rivalry is bargaining power. Customers are
low as just one-two price-takers not price-makers
players operate in
Upstream, Midstream
and Downstream LOW Bargaining
segments. Although a power is
few private operators medium as
have entered the despite
few players
industry in the last LOW MEDIUM
operating,
couple of years, they governmen
do not pose any major t at times
threat as of now delays
subsidy
payment to
oil
LOW companies,
thereby
increasing
losses
LOW
Threat is low, as other Threat of new
sources of energy like entrants is low,
solar, wind, coal and due to the
hydro electric power capital
are less developed. intensive
Pressure from nature of the
alternative sources industry and
might rise in future economies of
scale.
 MAJOR PRODUCTS
PNG - Domestic PNG - Industrial PNG - Commercial CNG

PNG (Piped Natural Industrial Commercial CNG is

Gas) is the natural customers
gas supplied through
setups / entities economical and
comprises of like Tea / Snacks one of the
mild steel (MS) and
those natural gas
polyethylene (PE) shops, preferred
pipelines to cater to customers who
need natural gas restaurants, food alternative fuel
the natural gas
demand of customers for their courts, hotels, sources for
in various segments, industrial setups.. hospitals, resorts, vehicles today
i.e. Domestic / canteen, hostels, CNG is
Commercial & Non -
Commercial /
Yarn Heat pollution free
Industrial segments. Setting and is a clean
burning fuel
CNG is
colourless,
odourless, non-
toxic and non-
carcinogenic.
 BOARD OF DIRECTORS
• R. J. N. Singh, IAS
Chairman of the Board of Directors

Dr. J N Singh, IAS, has done M.A. (International Studies, JNU), MDM (AIM,
Manila), Ph.D. from M S University. He has wide experience of working in
various Government Departments and Public Sector Undertakings.

• Dr. T. Natarajan, IAS

Director

Dr. T. Natarajan, IAS, holds a B.E. (Mining Engineering) and an MBA

(Finance & Marketing). He also holds Doctorate in Management.

• Smt. Manjula Pooja Shroff

Independent Women Director
An entrepreneur, she is regarded by many as the change agent for schooling
in the state of Gujarat. As CEO of Calorx, she has been instrumental in
founding and managing several premier schools
 MISSION AND VISION

To be a globally competitive E&P and trading company with strategic

transport leadership and integration in the oil & gas value chain,
maximizing shareholder value and responsive to customers and
environment,
 SHAREHOLDING & LISTING
INFORMATION
FACE VALUE : RS 10
Gujarat Gas Limited has received ISO 9001:2015
certification, the world’s most recognized quality
management standard. The certification was
awarded by M/s DNV GL on 11th May 2018.

Name of the Stock

Scrip Code
Exchange
Ahmedabad Stock 20860
Exchange Limited
Bombay Stock Exchange 523477
Limited
National Stock Exchange GUJRATGAS
of India Limited
Vadodara Stock Exchange 23477
Limited

High 779.90
Low 763.15
 PEER COMPETITORS
 INDRAPRASTHA GAS LIMITED (IGL)
 GAIL
 PETRONET LNG
 ONGC
ONGC is the market leader in this sector with highest market capitalization
among its peers. Despite the decline in the growth of sales in the industry, decline
in sales of IGL is the least(3 years comparision). P/E ratio of GGL is highest
amongst its competitor which may act as hindrance in acquiring investment.
Though the sales of GGL has decreased there is an increase in profitability of the
company on yoy basis.
 RESEARCH AND DEVELOPMENT
In the present world, with increase in demand for eco-friendly and
government thriving for same, the demand for natural gas as an
alternative for vehicles, household consumption and industrial
purpose has increased. GGL the largest City Gas Distribution
(CGD) company, currently operating in more than 22 distirict in
Gujarat is expanding its customer base in PNG and also in CNG
with increase in demand in eco-friendly vehicles. Keeping this in
mind, the sales of GGL can increase and as a net result their can be
increase in profitability.
 STRENTH WEAKNESS OPPORTUNITIES THREATS

1. Supplier of gas 1. Increasing 1.India's 1.Possibilities of

to more than cost due of raw growing energy reduction in
350000 domestic, materials. requirements. subsidies on
commercial and natural gas by
2. Low number 2.Increasing
industrial government of
consumers. of CNG stations natural gas India causing a fall
2. Robust system across the state. market in demand.
and process to globally. 2.Contracted LNG
ensure full safety. 3.Heavy price.
3. Ranked industrializatio 3.Economic
amongst top 100 n causing an instability and
in India's Best increase in fluctuations in
company to work India's policies.
demand for
for. 4.High exposure to
4. Strong focus on fuel. industrial segment
CSR activities. 4.Demand- where gas competes
Supply gap in with alternates like
India coal, fuel, oil and
other dirty but
cheap fuels.
 POLITICAL ECONOMICAL

1. Geopolitical conflicts.
2. Political Instability. The majority
of the governments of the oil 1. Global Economic crisis.
producing countries through their 2. Bankruptcy of the large
National Oil Companies control commercial banks.
more than 90% of the proven oil 3. Growth of Shadow Banking in
reserves and over 75% India.
of global oil and gas production.
3. Trade Wars.
 SOCIAL
1. Increasing awareness and focus on
more friendly fuels and decreasing in
the use of “dirty” fossil fuels such as oil
sands, coal, and shale gas.
2. Increasing global oil and gas
consumption levels until 2040 due to the
global increasing population.
3. Natural gas is considered the cleanest
fuel among the fossil fuels.
ENVIRONMENTAL
1. Operational hazards including
blowouts, spills and personal injury.
2.Natural disasters and extreme weather
conditions.
3.Inaccurate reserve estimates.
4.Volatile oil and gas prices
 SEGMENT ANALYSIS

The company operates in the the segment of natural gas of natural gas .
The CODM monitors the results of the business as one hence no seperate
segments need to be disclosed
Some other segments are:

PNG –Domestic
PNG – Industrial
PNG –Commercial
CNG
HAPI
 FINANCIAL STATEMENT ANALYSIS
Balance Sheet and statement of
profit and loss

BALANCE SHEET BALANCE SHEET

Standalone figures in Cr Standalone figures in Cr
Particulars FY 2018 Particulars FY18 FY17
Share Capital 137.68 Sales 6210 5119
Reserve & Surplus 1708.73 Less: Direct Expenditure 4679 3838
Borrowings 2213 Gross Profit 1531 1281
Other Current Liabilities 69 Less: Operating Expenditure 335 336
Total Liabilities 4128.4 Operating Profit 1196 945
Fixed Assets 5572.43 Other expenses 462 383
Long term loans & Advances 69.5 Interest 196 209
Investments 16.16 Depreciation 271.5 257
other Current Assets 69.02 PBT 462.5 303
Cash and Cash Equivalent 96.9 Tax 171.3 83
Total Assets 5823.6 PAT 237.4 219
FINANCIAL STATEMENT ANALYSIS

• The Debt is too high

compared to equity
signifying that the
company is taking
calculated risk

• Non current assets

,investments and reserves
are more sufficient to
cover the debt risks

Equity Borrowings
Reserve and surplus Non Current assets
• No hidden cost or fictitous
Investments cash cost
 FINANCIAL STATEMENT ANALYSIS

Cash Flow Statement

Year Ending March 2017 2016 Revenue
Reported PBT 303 253.7
Interest Expenses -20.42 -27.46
Depreciation 257 245
working capital change -11.8 -22.4 2017
Tax Paid -48.49 -57.6 Revenue
Operating cash flow (a) 701 637 2017 2016
Capex 481.16 558.42 303 253.7
FCF(Free cash Flow) -23 -183 Revenue
Investing Cash Flow 458.84 375.2
Debt issuance 17 -1519 2016
Interest Expenses -231.55 -251.88
Dividend -41.35 -83.07
Financial Cash Floww© -12.53 -211.86
Net Cash Flow (a+b+c)_ -12.53 -211.86 220 240 260 280 300 320
Closing Cash & Equivalent 10.2 22.73
 RATIO ANALYSIS

RATIO ANALYSIS
Particulars FY 18 FY 17
Gross Profit Margin 10.09 9.54 Chart Title
ROCE 16.22 12.99
Debt equity ratio 1.2 1.4 BV per share
Asset Turnover 1.54 1.4
Inventory Turnover 108.74 125.76 EPS
Debtor Turnover 16.71 16.61
EPS 21.6 15.94 Debtor Turnover
BV per share 134.11 119.57
Dividend per share 3 Inventory Turnover
2018
Asset Turnover 2017

Debt equity ratio

ROCE

Gross Profit Margin

0 50 100 150 200 250 300

PERIOD WISE ANALYSIS
COMPARATIVE ANALYSIS
RECENT ANALYSIS
 LONG TERM ANALYSIS

Setting up of Dahanu Spurline Natural Gas Project in

Thane,Maharashtra.
Expansion of top line by 19.2% with increse in sales volume by 5.2%.
To capture the growing CNG market, as a result of growing fuel prices,
the company is planning to add more than 200 CNG stations in future.
The interest burden of the company has reduced by 2% which is a
healthy sign. It shows that the company is able to repay its debt and
meet its expenses.
To continue the tag of “Largest CGD” the company has bidded for 21
geographical areas out of 86 opened for bid by the government
 ACHIEVEMENTS AND AWARDS
• Gujarat Gas Limited has received ISO 9001:2015 certification, the
world’s most recognized quality management standard.
• Management System Certificate for Quality Management System
• Management System Certificate for Environmental Management
System
• Management System Certificate for Occupational Health and Safety
Management System.
• Golden Peacock Award for Occupational Health and Safety.
 CONCLUSION

• Gujarat Gas (GGAS) in FY18 has restored falling sales trajectory, and
is well placed to register 12% volume growth pa through FY18-20ii as
it focusses on quality conscious over price sensitive segments, grows
business geographically and markets CNG more aggressively.
• The 24% pa PAT growth is highest amongst its peers and carries an
upside risks if couple of events unfold (gas under GST, favourable
verdict towards disputed areas, etc).
• The earnings tailwinds through FY22/23ii are strong, and
would attract investor’s focus over near term rich multiples. Hence,
our recommendation is to BUY Gujarat Gas.
 THANK YOU!

PRERNA JAIN 31
NIKHIL AGARWAL 7
DIPRA DASGUPTA 23
ABHISHEK SHARMA 39
DEEPAK BHAGERIA 15
RAJ SETHIA 46