Monday, February 13, 2012

>GSPL: “Volumes falter, retain negative view”

GSPL’s Q3 FY12 results were exactly in line with our estimates with revenue being 0.6% higher than our estimate and net profit being 0.5% lower than our estimate.

■ Q3 FY12 volume at 33.5 mmscmd, 2.5 mmscmd lower q-o-q
Transmission volume for Q3 FY12 was 33.5 mmscmd (Dec 2011 exit rate: 31 mmscmd), as against 36 mmscmd in Q2 FY12 & 37.16 mmscmd in Q1 FY12. The steep decline in KG D6 volumes, along with power plant shutdowns during the quarter, took its toll on GSPL’s transmission volumes. Hence, we downgrade our FY12 volume estimate to 35 mmscmd. The company has conveyed that it will begin to transmit 1 LNG cargo (~2.5 mmscmd) sourced through the Hazira terminal in CY12, which should compensate for further fall in domestic gas supply.

■ Q3 FY12 transmission tariff @ Rs 0.9/scm
Transmission tariff for Q3 FY12 was Rs 0.9/scm, as against Rs 0.84/scm in Q2 FY12 & Rs 0.78/scm in Q3 FY11. Hence, pre-tax ROCE for the quarter stood at 27.5%, which is significantly higher than the regulatory norm of 18%. The company has submitted its transmission tariff to the PNGRB for its approval and we expect the tariff to be cut to Rs 0.75/scm from FY13 onwards.

■ Revenue at Rs 2,755 mn, 0.6% above estimate
Q3 FY12 revenue came in at Rs 2,755.4 mn, just 0.6% ahead of our estimate. Topline for the quarter was down 2.1% q-o-q and down 1.4% y-o-y. We note that the fall in revenue has been contained to ~2% due to take or pay contracts and longer distance transmission.

■ EBITDA at Rs 2,535 mn, 1% ahead of estimate
Q3 FY12 EBITDA stood at Rs 2,534.8 mn, down 2.1% q-o-q and down 3.4% y-oy. EBITDA margin for the quarter fell 1.8% y-o-y in spite of 16% rise y-o-y in tariffs, indicating higher per unit opex. Thus, operating expenses have jumped by 28.1% y-o-y amidst y-o-y fall of 7.3% in transmission volumes.

■ Depreciation & interest expense on expected lines
While depreciation was up 4.5% q-o-q at Rs 460.2 mn, interest expense was down 3.5% q-o-q at Rs 325.1 mn; which were as per expectation. The y-o-y jump of 1,710% in depreciation is due to adjustments made in Q3 FY11 as a result of change in depreciation rate on gas transmission pipelines.

■ PAT at Rs 1,261 mn, 0.5% below estimate
Consequently, Q3 FY12 PAT stood at Rs 1,261.3 mn, down 2.5% q-o-q & down 20.7% y-o-y. EPS for the quarter was Rs 2.2 compared to Rs 2.8 in Q3 FY11.