City Gas Distribution Dolat Report
DOLAT CAPITAL
City Gas Distribution
India Research
C G D
Coming out of the Woods...!!!
Analyst: Priyank Chandra Tel : +9122 4096 9737 E-mail: priyank@dolatcapital.com
January 04, 2013
DOLAT CAPITAL
Index Executive Summary Regulatory Development Gujarat Gas Company Indraprastha Gas CGD Sector 3 5 9 19 29
January 04, 2013
2
DOLAT CAPITAL
Executive Summary
City gas distribution (CGD), one of the rising sectors in the India energy pie, had seen an action packed CY12. In particular, the regulatory front played a key overhang on the sector and players’ valuations. Further, in the wake of regulatory issues being taken up at the Supreme Court level, the bidding for new areas took a back seat, and put to rest long term plans of government to promote CGD. We still believe that City gas distribution (CGD) space is an attractive long term investment option in the oil & gas space. The dynamism is fuelled by aspects as: Demand potential: Driven by Gas economics in comparison to alternate fuels Expanding gas grid network Acceptance of high prices by end users Environment friendly nature of gas Rising supplies: Fuelled by RLNG supply (though dearer) Energy majors looking to develop more LNG terminals Any new domestic finds would improve supply situation The two listed players in the CGD space, Indraprastha Gas (IGL) and Gujarat Gas Company (GGCL), are the pioneers of the segment in India. They will reap long term benefits of being the first movers. We are positive on the CGD space and like both IGL and GGCL as a structural play.
Valuation Matrix
Companies IGL Gujarat Gas* Net Sales EBITDA PAT EPS (`) ` FY12 FY13E FY14E FY15E FY12 FY13E FY14E FY15E FY12 FY13E FY14E FY15E FY12 FY13E FY14E FY15E 25,151 34,405 42,198 55,901 6,345 23,819 31,459 34,591 39,535 3,952 7,925 4,169 8,979 10,209 3,064 5,258 5,851 2,739 3,765 2,927 4,206 3,281 4,849 21.9 3,607 21.4 26.9 22.8 30.0 25.6 34.6 28.1
* December Year Ending FY13 = CY12 Companies IGL Gujarat
City Gas Distribution
India Research
C G D
Coming out of the Woods...!!!
Analyst: Priyank Chandra Tel : +9122 4096 9737 E-mail: priyank@dolatcapital.com
January 04, 2013
DOLAT CAPITAL
Index Executive Summary Regulatory Development Gujarat Gas Company Indraprastha Gas CGD Sector 3 5 9 19 29
January 04, 2013
2
DOLAT CAPITAL
Executive Summary
City gas distribution (CGD), one of the rising sectors in the India energy pie, had seen an action packed CY12. In particular, the regulatory front played a key overhang on the sector and players’ valuations. Further, in the wake of regulatory issues being taken up at the Supreme Court level, the bidding for new areas took a back seat, and put to rest long term plans of government to promote CGD. We still believe that City gas distribution (CGD) space is an attractive long term investment option in the oil & gas space. The dynamism is fuelled by aspects as: Demand potential: Driven by Gas economics in comparison to alternate fuels Expanding gas grid network Acceptance of high prices by end users Environment friendly nature of gas Rising supplies: Fuelled by RLNG supply (though dearer) Energy majors looking to develop more LNG terminals Any new domestic finds would improve supply situation The two listed players in the CGD space, Indraprastha Gas (IGL) and Gujarat Gas Company (GGCL), are the pioneers of the segment in India. They will reap long term benefits of being the first movers. We are positive on the CGD space and like both IGL and GGCL as a structural play.
Valuation Matrix
Companies IGL Gujarat Gas* Net Sales EBITDA PAT EPS (`) ` FY12 FY13E FY14E FY15E FY12 FY13E FY14E FY15E FY12 FY13E FY14E FY15E FY12 FY13E FY14E FY15E 25,151 34,405 42,198 55,901 6,345 23,819 31,459 34,591 39,535 3,952 7,925 4,169 8,979 10,209 3,064 5,258 5,851 2,739 3,765 2,927 4,206 3,281 4,849 21.9 3,607 21.4 26.9 22.8 30.0 25.6 34.6 28.1
* December Year Ending FY13 = CY12 Companies IGL Gujarat