Energy
India
ATTRACTIVE
JULY 10, 2017
UPDATE
BSE-30: 31,716
1QFY18E preview—weak for OMCs and RIL; strong for CGDs. We expect OMCs to
report weak profitability driven by lower refining margins and inventory losses. RIL’s
results are expected to be weak as well, further impacted by a reduction in light-heavy
differential and appreciation in rupee against US dollar. Upstream PSUs will be impacted
by lower crude prices and a stronger rupee, amid steady volumes. GAIL and PLNG are
expected to report stable EBITDA sequentially. IGL and MGL will benefit from lower RM
cost driven by appreciation in rupee, which was not passed on to consumers.
OMCs: weak profitability driven by low distillate spreads and inventory losses
We expect downstream PSUs to report lower profitability in 1QFY18, being impacted by (1) lower
spreads for key petroleum fuels, (2) adventitious/inventory losses due to correction in crude prices
towards end of the quarter and (3) muted growth in volumes; we remain watchful of movement
in fuel market share for OMCs. Modestly lower marketing margins on gasoline (-40p/liter qoq)
will be partially offset by higher marketing margins on diesel (+10p/liter). We expect BPCL,
HPCL and IOCL to report EPS of `8.8, `9 and `5.4 respectively, well below reported numbers in
4QFY17, which benefited from significant adventitious gains under rising crude price environment.
We expect Castrol to report 13% yoy decline in net income to `1.8 bn (EPS of `3.6) led by 5%
decline in volumes, assuming lower off-take by trade channels pre-GST in the month of June
and sharp rise in base oil prices, partially offset by price hikes.
RIL: sequential decline in EBITDA due to lower realized refining margins and stronger rupee
We expect RIL to report 5% qoq decline in consolidated EBITDA to `116 bn and 11% qoq
decline in net income to `71 bn (EPS of `24.1), driven by (1) lower realized refining spreads due
to weaker product spreads, strength in fuel oil cracks, lower light-heavy differentials and partial
shutdown of DHDS unit and (2) strength in rupee against US dollar, which will be offset by
higher polyester margins. We assume refining margins at US$10.5/bbl versus US$11.5/bbl in
4QFY17 and 1QFY17. Ramp-up schedule for downstream projects and updates on telecom
business will be key things to watch out for in the upcoming results and AGM.
Upstream: impacted by lower crude prices, lower other income and rupee appreciation
We expect ONGC’s adjusted net income to decline 20% qoq to `34.6 bn (EPS of `2.7) in
1QFY18 led by (1) lower crude realizations, (2) decrease in other income from previous quarter,
which was boosted by high dividend receipts and (3) a stronger rupee. OIL’s adjusted net
income will decline sharply by 55% qoq to `4 bn (EPS of `5) given a steep reduction in other
income.
Gas sector: stable EBITDA for GAIL and PLNG; CGD companies to get a boost from rupee
We expect GAIL to report sequentially stable adjusted EBITDA as, higher profitability from
(1) strength in LPG and petchem margins and (2) lower operating costs, will likely be offset by
lower petchem production from planned shutdown at PATA plant. We expect PLNG to report
sequentially steady EBITDA as modestly higher LNG off-take will be offset by lower realized
tariffs; however, net income will decline 12% qoq to `4.2 bn (EPS of `2.8) due to normalization
of effective tax rate. We expect IGL and MGL to report sharp jump in EPS to `13.1 (+31% qoq)
and `11.2 (+11% qoq) driven by a sharp expansion in unit EBITDA margins, as lower cost of
input gas in rupee terms, was not passed on to end-consumers in CNG and domestic PNG
segment during the quarter; IGL’s profitability is further boosted by superior volume growth.
Tarun Lakhotia
[email protected]
Mumbai: +91-22-4336-0875
Akshay Bhor
[email protected]
Mumbai: +91-22-4336-0876
Kotak Institutional Equities Research
[email protected]
Mumbai: +91-22-4336-0000
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
India
Energy
Exhibit 1: Singapore complex refining margins were sequentially flat in 1QFY18
Weekly Singapore refining margins (US$/bbl)
(US$/bbl)
Singapore complex refining margins
Reuters Singapore refining margins
9
6
3
0
(3)
Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17
Reuters Singapore refining margins, March fiscal year-ends (US$/bbl)
2012
2013
2014
2015
2016
2017
2018
1Q
8.2
6.7
6.6
5.8
8.1
5.1
6.4
2Q
8.9
9.1
5.2
4.8
6.2
5.1
3Q
6.4
6.6
5.4
6.3
8.0
6.7
4Q
7.5
8.5
6.2
8.6
7.8
6.4
Average
7.8
7.7
5.9
6.3
7.5
5.8
6.5
Source: Reuters, Kotak Institutional Equities estimates
Exhibit 2: Product cracks for gasoline and diesel declined qoq in 1QFY18
Product spreads for diesel and gasoline, 1QFY16 onwards (US$/bbl)
(US$/bbl)
25
Gasoline cracks
Diesel cracks
20
15
10
19.6
19.3
18.7
18.2
13.5
15.0
13.4
10.5
5
9.6
14.9
10.6
11.4 10.8
14.9
12.3
12.0
14.3
11.4
0
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
Source: Reuters, Kotak Institutional Equities
2
KOTAK INSTITUTIONAL EQUITIES RESEARCH
Energy
India
Exhibit 3: Differential between light and heavy crudes reduced further in 1QFY18
Light-heavy crude differential, 1QFY16 onwards (US$/bbl)
(US$/bbl)
Light-heavy crude differential
4.0
3.5
3.0
2.5
2.0
3.4
3.2
1.5
2.7
2.7
2.8
2.9
2.9
2.7
2.2
1.0
0.5
0.0
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
Source: Bloomberg, Kotak Institutional Equities
Exhibit 4: Sequentially lower margins on gasoline; steady margins on diesel
Gross marketing margins on diesel and gasoline, 1QFY16 onwards (Rs/liter)
(Rs/liter)
Marketing margins on diesel
Marketing margins on gasoline
3.5
3.0
2.5
2.0
1.5
2.9
2.5 2.5
1.0
1.9
2.9
3.1
3.3
3.1
2.4
2.2
2.6
2.7
2.7 2.7
2.6
2.7 2.7
2QFY17
3QFY17
4QFY17
1QFY18
2.5
0.5
0.0
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
Source: PPAC, Kotak Institutional Equities estimates
KOTAK INSTITUTIONAL EQUITIES RESEARCH
3
India
Energy
Exhibit 5: Modest growth in petroleum consumption during April-May 2017, as compared to pre-demonetization quarters
Petroleum consumption volumes and growth, 1QFY16 onwards
1QFY16
Consumption (mn tons)
MS
HSD
LPG
SKO
ATF
FO & LSHS
Naphtha+NGL
Domestic consumption
Growth (%)
MS
HSD
LPG
SKO
ATF
FO & LSHS
Naphtha+NGL
Domestic consumption
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
Apr-May 17
5.4
19.2
4.5
1.7
1.5
1.4
3.2
45.0
5.3
17.0
4.8
1.7
1.5
1.7
3.4
43.5
5.4
18.9
5.1
1.7
1.6
1.6
3.2
46.2
5.7
19.5
5.3
1.7
1.6
2.0
3.4
50.0
5.9
20.1
4.8
1.6
1.7
1.9
3.3
49.6
5.9
17.2
5.4
1.5
1.7
1.8
3.5
47.2
6.1
20.0
5.7
1.2
1.8
1.8
3.3
48.9
5.8
18.8
5.7
1.2
1.8
1.6
3.2
48.5
4.5
14.5
3.4
0.7
1.2
1.2
9.1
34.6
12.3
3.6
8.4
(3.3)
7.3
(0.7)
13.9
6.6
16.1
8.0
7.8
(3.5)
5.4
7.2
23.0
11.6
14.4
7.6
7.4
(4.4)
13.6
11.8
32.7
11.3
15.3
11.3
12.4
(3.5)
11.3
25.9
11.9
16.8
10.0
4.7
7.5
(7.7)
11.5
31.5
3.8
10.2
11.7
0.8
14.0
(12.4)
12.6
10.9
1.2
8.6
12.0
5.5
10.8
(32.1)
11.2
15.8
0.5
6.0
1.8
(3.7)
7.0
(31.7)
13.0
(16.5)
(5.8)
(3.1)
10.0
5.4
7.7
(34.6)
10.2
(5.9)
4.3
4.4
Source: PPAC, Kotak Institutional Equities
Exhibit 6: Sequential decline in polymer margins; sharp uptick in polyester margins
Asia petchem margins and prices, 1QFY16 onwards (US$/ton)
Change (%)
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
yoy
qoq
2.5
Global margins
HDPE – naphtha
772
744
663
734
722
715
675
638
655
(9.3)
LLDPE – naphtha
758
716
639
738
714
747
703
652
659
(7.7)
1.1
PP – naphtha
687
587
446
502
541
589
569
530
537
(0.7)
1.4
PVC – naphtha
316
368
319
394
391
441
480
434
432
10.4
(0.5)
PSF – naphtha
670
708
690
661
632
669
615
717
823
30.2
14.7
PFY – naphtha
1,088
1,068
929
890
835
826
782
866
939
12.5
8.5
345
342
325
380
372
397
342
375
353
(5.2)
(5.8)
HDPE
1,334
1,205
1,110
1,084
1,134
1,104
1,125
1,138
1,098
(3.1)
(3.4)
LLDPE
1,320
1,177
1,086
1,088
1,126
1,136
1,153
1,152
1,103
(2.0)
(4.2)
PP
1,249
1,048
892
852
953
979
1,018
1,029
981
3.0
(4.6)
PX – naphtha
Global prices
PVC
877
829
765
744
803
831
930
933
876
9.1
(6.2)
PSF
1,232
1,168
1,137
1,012
1,043
1,058
1,065
1,217
1,267
21.4
4.1
PFY
1,650
1,528
1,375
1,240
1,247
1,215
1,232
1,365
1,383
11.0
1.3
907
802
771
730
784
786
791
874
797
1.7
(8.8)
PX
Source: Platt’s, Tecnon, Kotak Institutional Equities
4
KOTAK INSTITUTIONAL EQUITIES RESEARCH
Energy
India
Exhibit 7: Weak expectations due to lower refining margins and Rupee appreciation, partially offset by robust polyester margins
Quarterly earnings for RIL, 1QFY17-1QFY18E (Rs mn)
Change (%)
Jun-16
Mar-17
Jun-17
yoy
qoq Comments
Reliance Industries
Net sales
649,900
848,230
819,494
26.1
EBITDA
112,230
122,330
116,010
3.4
(5.2)
EBIT
84,980
88,790
82,035
(3.5)
(7.6)
PBT
96,700
102,590
95,167
(1.6)
Reported PAT
71,130
80,460
71,280
0.2
EPS (Rs/share)
24.1
27.2
24.1
0.2
Exchange rate (Rs/US$)
66.9
67.0
64.5
(3.6)
Refining throughput (mn tons)
16.8
17.5
17.5
4.2
0.0
Refining margin (US$/bbl)
11.5
11.5
10.5
(8.7)
(8.7)
1,146
1,069
1,048
(8.6)
(2.0)
513
580
557
8.5
(4.0)
Refining assumptions
(3.4)
We expect RIL to report sequential decline in EBITDA led by (1) lower
refining margins and (2) a stronger Rupee against US Dollar, partially
offset by higher petchem margins
(7.2)
(11.4) We assume refining margins at US$10.5/bbl versus US$11.5/bbl in
(11.4) 4QFY17 and 1QFY17, reflecting lower product spreads, lower light-heavy
differentials and planned shutdown of secondary unit
(3.7)
Petchem assumptions
Polymer volumes ('000 tons)
Polyester volumes ('000 tons)
Fiber intermediates ('000 tons)
1,533
1,885
1,847
20.5
(2.0)
HDPE margins over naphtha (US$/ton)
675
638
655
(3.1)
2.5
LLDPE margins over naphtha (US$/ton)
703
652
659
(6.2)
1.1
PP margins over naphtha (US$/ton)
569
530
537
(5.5)
1.4
PSF margins over naphtha (US$/ton)
615
717
823
33.7
14.7
PFY margins over naphtha (US$/ton)
782
866
939
20.1
8.5
Source: Company, Kotak Institutional Equities estimates
KOTAK INSTITUTIONAL EQUITIES RESEARCH
5
India
Energy
Exhibit 8: OMCs will have a tough quarter amid weak refining margins, adventitious losses and muted growth in volumes
Quarterly earnings for downstream companies, 1QFY17-1QFY18E (Rs mn)
Change (%)
Jun-16
Mar-17
Jun-17
yoy
qoq Comments
BPCL
Net sales
469,387
570,365
542,879
15.7
EBITDA
39,192
27,023
18,032
(54.0)
EBIT
34,877
21,784
12,719
(63.5)
PBT
37,415
26,933
16,534
(55.8)
Reported PAT
26,205
18,417
11,574
(55.8)
EPS (Rs/share)
20.0
16.5
8.8
(55.8)
Crude throughput (mn tons)
6.2
6.0
6.3
1.6
4.7
Domestic sales (mn tons)
9.7
9.3
10.0
3.0
8.2
Refining margin (US$/bbl)
6.1
6.0
5.1
Adventitious gain/(loss)
12,830
4,022
(4,762)
Forex gain/(loss)
(1,663)
3,318
214
—
—
—
Assumptions
Net over-recovery/(under-recovery)
(4.8)
Sequentially lower EBITDA reflects (1) weak refining margins (US$0.9/bbl qoq) and (2) adventitious loss of Rs4.7 bn instead of gains
(41.6)
of Rs4 bn in the previous quarter
(38.6)
(33.3)
(37.2) We assume (1) higher crude throughput at 6.3 mn tons versus 6 mn tons
(46.5) in 4QFY17 and (2) muted 3% yoy growth in sales volumes to 10 mn
tons
HPCL
Net sales
448,408
515,248
476,209
6.2
(7.6)
EBITDA
36,268
32,225
17,845
(50.8)
(44.6)
EBIT
30,160
25,475
11,333
(62.4)
(55.5)
PBT
31,518
29,109
13,683
(56.6)
(53.0)
Reported PAT
20,984
18,188
9,168
(56.3)
(49.6)
EPS (Rs/share)
20.6
23.0
9.0
(56.3)
(60.8)
Crude throughput (mn tons)
4.5
4.6
4.6
2.7
(0.9)
Domestic sales (mn tons)
8.9
8.8
9.2
3.5
5.0
Refining margin (US$/bbl)
6.8
8.0
5.9
11,000
Assumptions
Adventitious gain/(loss)
Sequentially lower EBITDA reflects (1) US$2.1/bbl qoq decline in refining
margins and (2) adventitious loss of Rs4.1 bn instead of gains of Rs7.4
bn in the previous quarter
We assume (1) stable crude throughput at 4.6 mn tons and (2) muted
3.5% yoy growth in sales volumes to 9.2 mn tons
7,430
(4,082)
(747)
3,329
215
—
—
—
Net sales
860,807 1,003,375
983,481
14.3
(2.0)
EBITDA
136,835
110,316
54,239
(60.4)
(50.8)
EBIT
122,485
93,026
37,495
(69.4)
(59.7)
PBT
120,388
102,079
37,955
(68.5)
(62.8)
82,690
37,206
26,189
(68.3)
(29.6)
We assume (1) higher crude throughput at 17.8 mn tons versus 17.1 mn
(67.6) tons in 4QFY17 and (2) muted 3% yoy growth in sales volumes to 21 mn
(67.6) tons
Forex gain/(loss)
Net over-recovery/(under-recovery)
IOCL
Reported PAT
Extraordinaries
Adjusted PAT
EPS (Rs/share)
—
(66,230)
—
82,690
80,918
26,189
(68.3)
17.0
16.7
5.4
(68.3)
Sequentially lower EBITDA reflects (1) US$3.5/bbl qoq decline in refining
margins including inventory loss and (2) adventitious loss of Rs8.8 bn on
products instead of gains of Rs9.2 bn in the previous quarter
Assumptions
Crude throughput (mn tons)
16.1
17.1
17.8
10.6
4.2
Domestic sales (mn tons)
20.4
19.6
21.0
3.0
7.1
Refining margin (US$/bbl)
10.0
9.0
5.5
9,160
(8,829)
Adventitious gain/(loss)
Forex gain/(loss)
23,790
(3,320)
15,010
968
—
—
—
Net sales
9,708
8,822
9,544
(1.7)
8.2
EBITDA
3,173
2,633
2,685
(15.4)
2.0
EBIT
3,024
2,510
2,567
(15.1)
2.3
PBT
3,190
2,692
2,732
(14.4)
1.5
Reported PAT
2,069
1,790
1,804
(12.8)
EPS (Rs/share)
4.2
3.6
3.6
(12.8)
0.8 We assume (1) volumes of 53.8 mn liters versus 56.6 mn liters in
0.8 2QCY16 and 50.2 liters in 1QCY17 and (2) sequentially lower EBITDA
margins at 28.1% (-170 bps qoq)
EBITDA margin (%)
32.7
29.8
28.1
Volumes (mn liters)
56.6
50.2
53.8
(5.0)
7.1
Gross realization (Rs/liter)
171.5
175.7
177.5
3.5
1.0
Net contribution (Rs/liter)
97.7
95.2
90.3
(7.6)
(5.2)
Net over-recovery/(under-recovery)
Castrol India
Assumptions
15% yoy decline in EBITDA reflects our assumption of (1) 5% decline in
volumes due to de-stocking before GST and (2) a sharp 455 bps
reduction in EBITDA margins due to rising base oil prices
86 bps 94 bps
Source: Company, Kotak Institutional Equities estimates
6
KOTAK INSTITUTIONAL EQUITIES RESEARCH
Energy
India
Exhibit 9: Sequentially lower crude realizations and rupee appreciation to dent upstream profitability
Quarterly earnings for upstream companies, 1QFY17-1QFY18E (Rs mn)
Change (%)
Jun-16
Mar-17
Jun-17
yoy
qoq Comments
ONGC
Net sales
177,848
217,140
193,696
EBITDA
93,905
101,142
92,544
(1.4)
EBIT
56,908
47,267
45,398
(20.2)
PBT
63,512
67,261
51,759
(18.5)
Qoq decline in adjusted EBITDA reflects (1) lower crude realizations at
US$51/bbl, (2) a stronger Rupee against US Dollar and (3) lower other
(4.0)
income
(23.0)
Reported PAT
42,325
43,402
34,678
(18.1)
(20.1)
—
(11,890)
—
NA
42,325
52,722
34,678
(18.1)
3.3
4.1
2.7
(18.1)
Extraordinaries
Adjusted PAT
EPS (Rs/share)
8.9
(10.8)
(8.5)
NA We model 2% qoq decline in overall sales volumes of crude oil to 6 mn
(34.2) tons (+2% yoy) and stable natural gas sales volumes at 4.6 bcm (+12%
(34.2) yoy)
Assumptions
Total crude sales (mn tons)
5.9
6.1
6.0
2.4
Total gas sales (bcm)
4.1
4.6
4.6
11.8
0.2
Net crude realization (US$/bbl)
46
55
51
10.3
(7.4)
Gas price realization (US$/mn BTU)
3.4
2.8
2.8
(19.1)
(0.7)
—
—
—
Subsidy burden (Rs bn)
(2.0)
Oil India
Net sales
22,212
25,119
23,014
3.6
(8.4)
EBITDA
9,247
9,373
7,811
(15.5)
(16.7)
EBIT
6,340
5,153
3,987
(37.1)
(22.6)
PBT
7,746
12,160
6,094
(21.3)
(49.9)
Reported PAT
4,944
193
4,022
(18.6)
NA
—
(13,267)
—
NA
NA
Extraordinaries
Adjusted PAT
4,944
8,950
4,022
(18.6)
(55.1)
6.2
11.2
5.0
(18.6)
(55.1)
Total crude sales ('000 tons)
785
802
813
3.6
1.4
Total gas sales (mcm)
606
591
593
(2.1)
0.4
Net crude realization (US$/bbl)
43
53
49
Subsidy burden (Rs bn)
—
—
—
EPS (Rs/share)
Qoq decline in adjusted EBITDA reflects (1) lower crude realizations at
US$49/bbl, (2) a stronger Rupee against US Dollar and (3) lower other
income
We model sequentially stable sales volumes of crude oil at 0.81 mn tons
(+4% yoy) and natural gas at 0.59 bcm (-2% yoy)
Assumptions
13.0
(7.2)
Source: Company, Kotak Institutional Equities estimates
KOTAK INSTITUTIONAL EQUITIES RESEARCH
7
India
Energy
Exhibit 10: CGD companies to benefit from rupee appreciation; GAIL and PLNG may report sequentially flat EBITDA
Quarterly earnings for gas sector companies, 1QFY17-1QFY18E (Rs mn)
Change (%)
Jun-16
Mar-17
Jun-17
yoy
qoq Comments
GAIL (India)
Net sales
EBITDA
107,067
134,520
138,158
29.0
15,933
17,043
17,002
6.7
2.7
Sequentially steady EBITDA as (1) strength in LPG and petchem margins
and (2) lower operating costs, will likely be offset by lower petchem
(0.6)
production from PATA due to planned shutdown
(16.3)
(0.2)
EBIT
12,578
13,572
13,485
7.2
PBT
11,965
16,330
13,676
14.3
Reported PAT
13,352
2,602
9,026
(32.4)
EPS (Rs/share)
5.0
6.1
5.3
6.7
(12.1)
Transmission volumes (mcm/d)
96
102
102
5.8
0.5
Gas sales volumes (mcm/d)
79
82
83
4.9
0.7
Polymers volumes ('000 tons)
110
186
121
9.6
(35.2)
LPG volumes ('000 tons)
192
211
205
6.8
(2.8)
Other liquids ('000 tons)
52
65
57
9.2
(12.6)
1.18
1.28
1.28
9.1
(0.2)
Net sales
2,581
2,446
2,603
0.8
EBITDA
2,333
2,013
2,273
(2.6)
EBIT
1,903
1,553
1,815
(4.6)
PBT
1,881
1,710
1,967
4.6
Reported PAT
1,213
1,270
1,278
5.4
EPS (Rs/share)
2.2
2.3
2.3
5.4
Volumes (mcm/d)
25.1
23.4
24.8
(1.5)
6.0
Transmission tariff (Rs/cu. m)
1.07
1.20
1.09
1.6
(8.9)
246.9
Assumptions
Transmission tariff (Rs/cu. m)
We model sequentially stable gas transmission volumes at 102 mcm/d
as compared to 101.5 mcm/d in 4QFY17 and 96.4 mcm/d in 1QFY17
GSPL
Assumptions
6.4
Sequential increase in EBITDA reflect modestly higher transmission
volumes and lower operating costs, partially offset by lower realized
16.9
tariffs
15.0
12.9
0.7 We assume (1) gas volumes at 24.8 mcm/d (+6% qoq) and (2) lower
0.7 transmission tariffs at Rs1.09/scm versus Rs1.2/scm in the previous
quarter, which included ship-or-pay charges
Petronet LNG
Net sales
53,373
63,651
69,079
29.4
EBITDA
6,425
7,063
7,023
9.3
8.5
EBIT
5,619
6,047
5,993
6.7
PBT
5,556
6,186
6,068
9.2
(1.9)
Reported PAT
3,779
4,708
4,156
10.0
(11.7)
EPS (Rs/share)
2.5
3.1
2.8
10.0
(11.7)
168.1
180.0
182.1
8.3
1.2
45.6
46.2
44.7
(2.0)
(3.2)
Net sales
8,997
10,019
10,248
13.9
2.3
EBITDA
2,596
2,422
2,855
9.9
17.9
EBIT
2,131
2,178
2,401
12.7
10.2
(0.6) Sequentially steady EBITDA as modestly higher off-take of LNG volumes
(0.9) will be offset by modestly lower realized tariffs
Assumptions
Total volumes (tn BTUs)
Re-gasification tariff (Rs/mn BTU)
We assume LNG re-gasification volumes at 182 tn BTUs versus 180 tn
BTUs in 4QFY17 and 168 tn BTUs in 1QFY17
Indraprastha Gas
PBT
2,211
2,375
2,554
15.5
Reported PAT
1,633
1,395
1,829
12.0
EPS (Rs/share)
11.7
10.0
13.1
12.0
Assumptions
7.5
31.2 We assume (1) sequentially stable gas sales volumes at 4.8 mcm/d and
31.2 (2) sharp qoq increase in unit EBITDA to Rs6.5/scm from Rs5.6/scm in
4QFY17
CNG sales (mn kg)
222
233
244
10.0
PNG sales (mscm)
93
108
110
18.5
2.0
6.6
5.6
6.5
(1.3)
16.0
Operating profit (Rs/scm)
We expect 10% yoy growth in EBITDA led by (1) 11% growth in overall
volumes and (2) higher gross margins reflecting lower domestic gas price
and a stronger Rupee
4.8
Mahanagar Gas
Net sales
4,834
5,253
5,284
9.3
0.6
EBITDA
1,524
1,631
1,805
18.5
10.7
EBIT
1,307
1,375
1,540
17.8
PBT
1,425
1,505
1,679
17.8
Reported PAT
927
995
1,108
19.5
EPS (Rs/share)
9.4
10.1
11.2
19.5
169
173
175
3.5
58
63
64
10.0
2.3
6.7
6.9
7.5
12.7
9.2
Assumptions
CNG sales (mn kg)
PNG sales (mscm)
Operating profit (Rs/scm)
We expect 19% yoy growth in EBITDA led by (1) 5% growth in overall
volumes and (2) sharp increase in gross margins reflecting lower
12.1
domestic gas price and a stronger Rupee
11.6
11.4 We assume (1) sequentially stable gas sales volumes at 2.6 mcm/d and
11.4 (2) sharp qoq increase in unit EBITDA to Rs7.6/scm from Rs6.9/scm in
4QFY17
1.0
Source: Company, Kotak Institutional Equities estimates
8
KOTAK INSTITUTIONAL EQUITIES RESEARCH
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Percentage of companies covered by Kotak Institutional
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