a. Business Model:
Gujarat State Petronet Ltd (GSPL) was primarily developed to link various supply sources and users of natural gas in Gujarat through pipeline network. It is the only company In India to transmit natural gas for their clients without trading in it. The company has also taken the initiative in developing energy transportation infrastructure in Gujarat and connecting major natural gas supply sources and demand markets. The company has planned to lay high-pressure pipelines that will cover various industrial belts and cities of Gujarat. Due this the state government has given Infrastructure Project` status to the company, being the only gas grid in the country that functions on an open access basis.
b. Financials:
Sales growth:
Annual Sales have increased from 1000Cr in 2016 to 12500 Cr in 2020. This is a 12 fold increase in sales; Sales growth has been consistent and the last 1 year sales growth is 33%
EBITDA/ PAT Growth:
EBITDA increased from 866Cr in FY16 to 3223Cr in FY20; PAT increased from 419 to 2285 in the same period. This is driven by significant revenue increase and lesser pace of increase in interest and expenditures compared to revenues. Interest costs have increased from 80 to 370 Cr. Compared to PAT, interest costs are not very significant
Margin:
EBIT margin stable at 22%. EBITDA margin stable at 28% over last 4 years. PAT from 12% to 18%; EPS increased from 10 in 2017 to 31 in 2020.
ROE: Increased from 11 to 57 from FY16 to FY20. FY19 ROE is 41
ROCE: Increased from 15 to 34 from FY16 to FY20. FY19 ROCE is 28
Debt and coverage:
Debt to equity changed from 0.66 to 0.74 from 2017 to 2020. Interest coverage ratio increased from 5 to 8 in the same period and current ratio is 0.6. Overall in terms of solvency, the company looks good.
c. Shareholding:
Promoters hold 38% stake; FII is 16% and DII is 31%.
d. Expensiveness: PE ratios:
Earning per share: Rs. 31, Share price : 278; PE ratio = 9; Price to book ratio = 3;
Industry average PE ratio is 12.5;
Dividend Yield : 0.74%
EV/ EBITDA is 4
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