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In-line numbers sans higher opex; current volumes up 30% vs FY19
* Gujarat Gas Ltd.’s (GGL) Q4FY19 EBITDA/PAT was Rs2.54bn/1.17bn, up 14%/77% yoy but down 21%/16% qoq and 6% below/13% above our est. due to higher opex from the start of new CNG outlets and PNGRB 10th round bidding/income tax refund of Rs299mn.
* Gas sales volumes fell 1% qoq/4% yoy to 6.5mmscmd. Industrial PNG was down 5% qoq owing to market weakness until NGT’s Morbi coal ban in Mar’19, leading to a rapid volume uptick from thereon. CNG grew by 9% yoy. Current volumes are up 31% to 8.5mmscmd.
* Gross margins declined 7% qoq to Rs7.6/scm (in line) due to a 7% decrease in realizations, offsetting a 7% fall in unit gas cost. Opex/scm rose 15% qoq to Rs3.2 (up 27% yoy), leading to an 18% qoq drop in EBITDA/scm to Rs4.3, 6% below our estimate.
* We raise FY20/21E EPS by 10%/3%, building in 25% volume growth for FY20E. Due to higher capex, our DCF-based TP remains unchanged at Rs190. Reiterate Buy. We believe GAIL’s Morbi entry, as stated in media reports, would be challenging.
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