Gujarat State Petronet Q2FY16: Lower than expected volumes and tariff drag EBITDA

Motilal Oswal | May 2, 2012, midnight

OVERVIEW


- 2QFY16 transmission volumes were below expectations at 24.3mmscmd (est. 26.5mmscmd; flat YoY, +1% QoQ) despite incremental volumes from power sector (increase could be towards end of the quarter).


- Implied transmission tariff was below estimate at INR1,068/mscm (est INR1,130 and v/s INR1,126/mscm in 1QFY16) and could be due to 50% lower tariffs for incremental volumes for power sector under government’s scheme.


- Positive volume outlook; await PNGRB tariff revision GSPL’s current transmission volumes stand at 24 mmscmd. We foresee uptick in volumes led by increased uptake from power sector as a result of govt’s bid to revive power projects in India (though at lower tariffs) under new auction policy scheme.


- Sustained lower spot LNG prices should result in some uptick in the consumption and we expect a meaningful upside from PNGRB’s pending tariff revision.


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