GSPL's 3QFY20 results were below estimates due to sequential moderation in volumes and realised tariffs and higher operating costs. Gujarat Gas reported q-o-q flat EBITDA reflecting steady volumes and unit margins. We cut GSPL's FY2020-22E consolidated EPS by 1-3% to factor in lower contribution from standalone and higher contribution from Gujarat Gas. Retain 'SELL' with a revised SoTP-based fair value of Rs225 (Rs200 earlier), amid lack of positive triggers and full valuations.
GSPL's EBITDA moderated 13% q-o-q to Rs380 crore in 3QFY20, 6% below our estimate, amid 2% q-o-q moderation in net realised tariffs (revenues, net of gas transmission expenses) to Rs1.31/scm, 5.7% q-o-q decline in volumes to 36.9 mcm/d amid decline in refinery/petchem and industrial volumes and sharp 37% q-o-q rise in other expenditure.
Adjusted net income declined 29% q-o-q to Rs220 crore (EPS of Rs3.9), amid sharp moderation in other income in the absence of dividends from Gujarat Gas, which was partly offset by lower interest charges. 9MFY20 EBITDA remained steady yoy to Rs122 crore, despite an 8% rise in volumes to 38.1mcm/d, reflecting 5% decline in realised tariffs to Rs1.32/scm and 36% jump in other expenditure. Adjusted net income increased 16% y-o-y to Rs740 crore (EPS of Rs13.2), led by higher other income, lower interest and reduction in tax rate.
Adjusted net income declined 9.5% q-o-q to Rs197 crore (EPS of Rs2.9) in the third quarter, led by normalisation of tax rate to 25.3%; previous quarter included tax write-back pertaining to 1QFY20. In 9MFY20, GUJGAS has delivered a robust 65% growth in EBITDA to Rs1,208 crore and a 133% jump in adjusted net income to Rs64.8 crore (adjusted EPS of Rs9.4), driven by 42% growth in volumes to 9.3 mcm/d.