Shares of Gujarat Gas surged 14 per cent to Rs 433 on the BSE in intra-day trade on Monday, amid heavy volumes, after the company’s consolidated net profit nearly doubled to Rs 392 crore in the December quarter (Q3FY21) on the back of healthy revenue growth. The company had posted a profit of Rs 197 crore in the year-ago quarter.
Revenues increased 12.9 per cent year-on-year (YoY) to Rs 2,829 crore as sales volume jumped 22.9 per cent YoY. Gross margins improved Rs 1.2/scm YoY to Rs 7.8/scm. Ebitda (earnings before interest, taxes, depreciation, and amortisation) was at Rs 614.8 crore, up 65.9 per cent YoY.
The company's gas sales volume has shown a robust recovery post lockdown. The average gas sales volume for the quarter was at 11.44 mmscmd, up 23 per cent compared with the corresponding quarter previous year.
“During the current quarter, in industrial and compressed natural gas (CNG) category, the gas sales volume is up by 29 per cent and 2 per cent, respectively compared to the corresponding quarter previous year, and 16 per cent and 20 per cent respectively compared to the previous quarter. The company currently continues to flow total gas volume above 11.50 mmscrnd as against FY20 average sales of 9.44 mmscrnd,” Gujarat Gas said in a press release.
The company further said currently it has a comfortable liquidity position and prepaid term loans of Rs 988 crore during the nine months period ended on 3Ist December 2020, while continuing to service its debt obligations. During the nine months period ended on December 31, 2020, the company commercialised 83 new CNG stations.
Maintaining a balance between volumes and margins will be key to the company's performance, according to analysts.
"Gujarat Gas reported strong Q3 earnings and we are positive on it given higher than expected volumes and strong spreads from operating leverage and lower gas cost; low competitive intensity post ban on cheaper liquid fuels in FY20," said analysts at Prabhuds Lilladher, adding that it remains the best play on rising trend to ban polluting fuels in industrial areas.
The brokerage increased its FY21-23E earnings by 12-17 per cent to factor in strong volume uptick and margin expansion. It has a BUY rating on the stock with a target price of Rs 528.
At 10:02 am, the stock was trading 11 per cent higher at Rs 422 on the BSE, as compared to a 1.2 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped over four-fold with a combined 3.2 million equity shares having changed hands on the counter on the NSE and BSE so far.