Result Update

May 14, 2018

Rating matrix
Rating
Target
:
:
Buy
| 1000
Gujarat Gas (GUJGA) | 883
Target Period : 12 months
Potential Upside : 13%
Volume growth beats estimates…
What’s changed?
Target Unchanged
 Gujarat Gas reported a good set of numbers on the volume front
EPS FY19E Changed from | 36.2 to | 31.5 while profitability was below estimates on account of higher tax rate
EPS FY20E Changed from | 40.1 to | 39.9 and a lower-than-expected increase in gross margins. Revenues
Rating Unchanged increased 23.8% YoY to | 1733.6 crore and came in above our
estimates of | 1647.7 crore
Quarterly performance  Total reported volumes came in at 6.8 mmscmd vs. our estimate of
Q4FY18 Q4FY17 YoY (%) Q3FY18 QoQ (%) 6.3 mmscmd. Realisations were marginally below our estimate at
Revenue 1,733.6 1,400.2 23.8 1,571.3 10.3
| 28.5/scm (our estimate: | 28.9/scm). Gross margins were at
EBITDA 222.7 146.3 52.2 199.9 11.4
| 6.2/scm (our estimate: | 7.1/scm) leading to EBITDA of | 222.7
EBITDA (%) 12.8 10.4 22.9 12.7 12 bps
PAT 66.0 33.1 99.0 60.0 9.9
crore (our estimate: | 249.2 crore)
 Profitability almost doubled YoY to | 66 crore but came in below our
Key financials estimate of | 93.2 crore on account of a higher-than-expected tax
| Crore FY17 FY18 FY19E FY20E rate of 43.4% vs. usual run rate of 29%
Revenues 5,093.0 6,174.3 7,340.4 8,191.6
EBITDA 749.0 895.1 1,073.1 1,242.4 Volumes continue to show strength in Q4FY18
Net Profit 223.1 291.4 434.0 548.9
Volumes during the quarter continued to grow at a strong rate of 11%
EPS (|) 16.2 21.2 31.5 39.9
YoY to 6.8 mmscmd and came in above our estimate of 6.3 mmscmd in
Valuation summary Q4FY18. Volume growth was driven by strong growth in industrial
FY17 FY18 FY19E FY20E volumes at 4.7 mmscmd (our estimate: 4.4 mmscmd) along with an
P/E 54.5 41.7 28.0 22.1 uptick in PNG volumes at 0.72 mmscmd (our estimate: 0.64 mmscmd).
Target P/E 61.5 47.1 31.6 25.0 Conversions from fuel oil to gas and higher offtake from ceramic segment
EV / EBITDA 19.3 15.9 13.0 11.0 led the growth in industrial volumes. Going forward, the company plans
P/BV 7.4 6.7 5.8 4.9 to focus more on growth of CNG and domestic PNG segment. In lieu of
RoNW (%) 13.6 16.0 20.5 22.1 the same, the company set up 44 CNG stations during FY18 and is aiming
RoCE (%) 12.3 15.5 19.5 22.5 to add 200+ CNG stations in coming years to tap the opportunity of
Stock data
robust CNG vehicle conversion rates (~50000 per annum currently).
Particular Amount
Overall, we believe increase in both CNG as well as industrial PNG
Market Capitalization (| Crore) 12,157.1 demand will drive Gujarat Gas’ volume growth momentum. Volumes in
Total Debt (FY18) (| Crore) 2,200.9 FY19E, FY20E are estimated at 7.0 mmscmd, 7.8 mmscmd, respectively.
Cash and Investments (FY18) (| Crore) 132.5
Margins to remain sustainable, going ahead
EV (| Crore) 14,225.6
52 week H/L 973/721 The quarter witnessed an increase of 19.3% YoY and 3% QoQ in gross
Equity capital (| Crore) 137.7 margins to | 6.2/scm. However, the expansion in gross margin was
Face value (|) 10.0 relatively lower than our assumptions (our estimate: | 7.1/scm). The
Price performance implementation of long due price hikes in December 2017, current
normalisation of LNG prices and relatively lower domestic gas prices will
Return % 1M 3M 6M 12M
maintain the company’s margins, going ahead. We believe Gujarat Gas
IGL (9.6) (8.0) (17.1) 31.7
will continue to strike a balance between right volumes and margins. In
Gujarat Gas (4.1) (2.2) (5.0) 8.1
future, better gas sourcing arrangements and relatively stable LNG prices
Mahanagar Gas (4.5) (10.4) (22.7) (12.5)
will enable the company to report a stable margin of ~| 6.9/scm and
Research Analyst | 7.1/scm in FY19E and FY20E, respectively.
Mayur Matani Efforts towards higher penetration to provide volume growth
mayur.matani@icicisecurities.com
Gujarat Gas has been rapidly expanding its reach in Gujarat by way of
securing licences to expand its CGD network across five new areas,
Akshay Gavankar
making it to 19 districts of Gujarat, Dadra and Nagar Haveli, Thane and
akshay.gavankar@icicisecurities.com
Palghar in Maharashtra. We believe the company’s strong CGD network
offers good demand potential due to lower CNG and residential PNG
penetration and increased usage of natural gas for industrial volumes. We
value Gujarat Gas at 25x FY19E EPS of | 39.9 to arrive at a target price of
| 1000 with a BUY recommendation.

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Variance analysis
Q4FY18 Q4FY18E Q4FY17 YoY (%) Q3FY18 QoQ (%) Comments
Total Revenues 1,733.6 1,647.7 1,400.2 23.8 1,571.3 10.3 Higher-than-estimated revenues on account of higher sales volumes
Raw materials costs 1,355.1 1,245.2 1,114.0 21.6 1,221.2 11.0
Employees Cost 33.0 37.9 29.9 10.6 33.8 -2.2
Other Expenses 122.8 115.3 110.1 11.6 116.5 5.5
Total Expenditure 1,511.0 1,398.5 1,253.9 20.5 1,371.4 10.2
Lower-than-estimated EBITDA on account of lower-than-expected increase in gross
EBITDA 222.7 249.2 146.3 52.2 199.9 11.4 margins
EBITDA margins (%) 12.8 15.1 10.4 239 bps 12.7 12 bps
Depreciation 68.2 68.9 64.3 5.9 68.8 -1.0
EBIT 154.5 180.3 82.0 88.5 131.1 17.8
Interest 47.9 48.2 47.6 0.6 48.7 -1.7
Other Income 9.9 9.0 7.1 39.0 9.1 9.0
Extra Ordinary Item 0.0 0.0 0.0 NA 0.0 NA
PBT 116.5 141.2 41.5 180.7 91.5 27.4
Total Tax 50.6 48.0 8.4 503.6 31.5 60.7
PAT 66.0 93.2 33.1 99.0 60.0 9.9 Profitability was impacted by higher-than-expected tax rates

Key Metrics

Sales Volume (mmscmd) 6.8 6.3 6.1 10.8 6.3 7.4 Industrial retail volumes along with PNG volumes came in higher than our estimates
Realisation (|/scm) 28.5 28.9 25.5 11.7 27.1 5.0
Gross margin (|/scm) 6.2 7.1 5.2 19.3 6.0 2.9 Lower-than-expected increase in gross margins
Source: Company, ICICI Direct Research

Change in estimates
FY19E FY20E
(| Crore) Old New % Change Old New % Change Comments

Revenue 7,237.1 7,340.4 1.4 8,004.0 8,191.6 2.3 Increase in volume estimates led to increase in revenue estimates
We assume the current run rate of margins as the company has more focus on
EBITDA 1,178.1 1,073.1 -8.9 1,256.3 1,242.4 -1.1 volume growth and will catch up with margins in coming years
EBITDA Margin (%) 16.3 14.6 -166 bps 15.7 15.2 -53 bps
PAT 497.8 434.0 -12.8 551.8 548.9 -0.5
EPS (|) 36.2 31.5 -12.8 40.1 39.9 -0.5
Source: Company, ICICI Direct Research

Assumptions
Current Earlier
FY17 FY18 FY19E FY20E FY19E FY20E Comments
Sales Volume (mmscmd) 5.4 6.2 7.0 7.8 6.9 7.6 Volume growth estimates revised upwards for FY19E and FY20E
Realisation (|/scm) 25.7 27.2 28.8 29.0 28.9 28.9
Gross margin (|/scm) 6.2 6.6 6.9 7.1 7.4 7.2 We assume the current run rate of margins
Source: Company, ICICI Direct Research,

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 Company Analysis
Volumes continue to show strength in Q4FY18
Volumes during the quarter continued to grow at a strong rate of 11%
YoY to 6.8 mmscmd and came in above our estimate of 6.3 mmscmd in
Q4FY18. Volume growth was driven by strong growth in industrial
volumes at 4.7 mmscmd (our estimates: 4.4 mmscmd) along with an
uptick in PNG volumes at 0.72 mmscmd (our estimate: 0.64 mmscmd).
Conversions from fuel oil to gas and higher offtake from the ceramic
segment led the growth in industrial volumes. Going forward, the
company plans to focus more on the growth of CNG and domestic PNG
segment. In the lieu of the same, the company set up 44 CNG stations
during FY18 and is aiming to add 200+ CNG stations in coming years to
tap the opportunity of robust CNG vehicle conversion rates (50000 per
annum). Overall, we believe increase in both the CNG as well as industrial
PNG demand will drive Gujarat Gas’ volume growth momentum. Volumes
in FY19E and FY20E are estimated at 7.0 mmscmd and 7.8 mmscmd,
respectively.

Exhibit 1: Volume trend

7.8
8
6.8 7.0
7 6.3 6.2
6.1 6.1
5.7
6 5.3 5.4
5.2
5
mmscmd

4
3
2
1
0
Q2FY17 Q3FY17 Q4FY17 FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 FY18 FY19E FY20E

Source: Company, ICICI Direct Research

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 Margins to remain sustainable, going ahead
The quarter witnessed an increase of 19.3% YoY and 3% QoQ in gross
margins to | 6.2/scm. However, the gross margin expansion was
relatively lower than our assumptions (our estimate: | 7.1/scm). The
implementation of long due price hikes in December 2017, current
normalisation of LNG prices and relatively lower domestic gas prices is
expected to maintain the company’s margins, going ahead. We believe
Gujarat Gas will continue to strike a balance between right volumes and
margins. Going ahead, better gas sourcing arrangements and relatively
stable LNG prices will enable the company to report a stable margin of
~| 6.9/scm and | 7.1/scm in FY19E and FY20E, respectively.

Exhibit 2: Margin trend

8 7.5
6.9 6.9 7.1
6.7 6.6
6.2 6.0 6.2
5.8
Gross margins (| per scm)

6 5.2

0
Q2FY17 Q3FY17 Q4FY17 FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 FY18 FY19E FY20E

Source: Company, ICICI Direct Research

Exhibit 3: Revenue and EBITDA trend

35
28.5 28.8 29.0
30 26.5 26.4 27.1 27.2
25.0 25.5 25.6
25

20
| per scm

15

10
3.8 4.8 3.9 3.7 3.9 4.2 4.4
3.5 2.7 3.5
5

0
Q3FY17 Q4FY17 FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 FY18 FY19E FY20E
Revenues EBITDA

Source: Company, ICICI Direct Research

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 Outlook & Valuation
Gujarat Gas has been rapidly expanding its reach in Gujarat by way of
securing licences to expand its CGD network across five new areas,
making it to 19 districts of Gujarat, Dadra and Nagar Haveli, Thane and
Palghar in Maharashtra. We believe the company’s strong CGD network
offers good demand potential due to lower CNG and residential PNG
penetration and increased usage of natural gas for industrial volumes. We
value Gujarat Gas at 25x FY19E EPS of | 39.9 to arrive at a target price of
| 1000 with a BUY recommendation.

Exhibit 4: Valuations
Year Sales Sales Gr. EPS EPS Gr. PE
(| Crore) (%) (|) (%) (x) EV/EBITDA (x) RoNW (%) RoCE (%)
FY17 5093.0 -16.6 16.2 24.9 54.5 19.3 13.6 12.3
FY18 6174.3 21.2 21.2 30.6 41.7 15.9 16.0 15.5
FY19E 7340.4 18.9 31.5 48.9 28.0 13.0 20.5 19.5
FY20E 8191.6 11.6 39.9 26.5 22.1 22.5 22.1 22.5
Source: Company, ICICI Direct Research

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Recommendation history vs. consensus estimate
1,200 100.0
1,100 90.0
1,000 80.0
900 70.0
60.0
800
(|)

50.0

(%)
700
40.0
600 30.0
500 20.0
400 10.0
300 0.0
Sep-14 Jan-15 Oct-15 Feb-16 Jul-16 Nov-16 Mar-17 Aug-17 Dec-17 May-18

Price Idirect target Consensus Target Mean % Consensus with Buy

Source: Bloomberg, Company, ICICI Direct Research

Key events
Date Event
Jul-10 The company entered into an agreement with the BG group for purchase of RLNG to meet its gas requirements
Apr-11 Gujarat Gas declares strong results with 33% increase in topline and EBITDA margin expansion of 530 bps to 25.2%
Nov-11 BG Group expresses its desire to sell 65% stake in Gujarat Gas Company Limited
Apr-12 The Petroleum and Natural Gas Regulatory Board (PNGRB) fixed IGL's network tariff rate and compression charge, which was way below market expectations.
Negative for the CGD sector
Oct-12 BG group sells its stake in Gujarat Gas for US$470 million to GSPC group
Feb-13 Gujarat Gas' results were below market expectations on account of higher LNG prices
Aug-13 Gujarat Gas reported its Q2CY13 results with PAT increasing 91.6% YoY to | 100.6 crore
Apr-14 Gujarat Gas announces merger with group companies making it the largest city gas distribution company in India
May-15 As per the scheme of amagamation and arrangement, Gujarat Gas Limited reduced its equity shares from 500,000,000 share of |10 each into 13,157,895 shares of
|10 each
Sep-15 Listing of Shares of Gujarat Gas Limited
Oct-17 Gujarat gas hikes prices of CNG and PNG in Gujarat for the first time since 2014, on the back of rise in domestic gas prices
Dec-17 Gujarat Gas Hikes prices for its industrial customers by ~10%
Source: Company, ICICI Direct Research

Top 10 Shareholders Shareholding Pattern

Rank Name Latest Filing Date % O/S Position (m) Change (m) (in %) Mar-17 Jun-17 Sep-17 Dec-17 Mar-18
1 Gujarat State Fertilizers and Chemicals Ltd 31-Dec-17 6.8 9.4 0.0 Promoter 60.9 60.9 60.9 60.9 50.4
2 Government of Gujarat 31/Dec/17 6.5 9.0 0.0 FII 15.4 14.8 14.9 14.3 14.2
3 Gujarat Industrial Development Corporation, Ltd. 31-Dec-17 3.9 5.3 0.0 DII 2.3 2.5 2.4 2.6 2.7
4 Aberdeen Asset Management (Asia) Ltd. 31/Dec/17 3.8 5.3 1.5 Others 21.4 21.8 21.8 22.2 32.7
5 Gujarat Alkalies And Chemicals Ltd 31-Dec-17 3.1 4.3 0.0
6 Norges Bank Investment Management (NBIM) 31/Dec/17 0.9 1.3 -0.4
7 Goldman Sachs Asset Management International 31-Mar-18 0.9 1.2 0.0
8 Fidelity International 31/Oct/17 0.8 1.1 1.1
9 FIL Investment Management (Singapore) Ltd. 31-Dec-17 0.8 1.1 0.0
10 HSBC Global Asset Management (Hong Kong) Limited 31/Jan/18 0.7 1.0 0.0
Source: Reuters, ICICI Direct Research

Recent Activity
Investor name Investor name
Investor name Value (m) Shares (m) Investor name Value (m) Shares (m)
Aberdeen Asset Management (Asia) Ltd. 20.34 1.54 GSPC Group -953.73 -74.57
Fidelity International 14.95 1.06 Norges Bank Investment Management (NBIM) -5.29 -0.40
Caisse de Depot et Placement du Quebec 1.59 0.12 PPFAS Asset Management Private Limited -3.83 -0.30
Stewart Investors 1.13 0.09 BlackRock Asset Management North Asia Limited -1.70 -0.13
First State Investments (Singapore) 0.53 0.04 INVESCO Asset Management Limited -1.53 -0.12
Source: Reuters, ICICI Direct Research

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Financial summary
Profit and loss statement | crore Cash flow statement | crore
(Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E
Revenue 5,093.0 6,174.3 7,340.4 8,191.6 Profit after Tax 223.1 291.4 434.0 548.9
Growth (%) -17% 21% 19% 12% Add: Depreciation 257.3 271.8 284.2 310.6
Raw material Costs 3837.9 4678.0 5591.9 6195.6 Add: Others -1.6 50.0 50.0 50.0
Employee Costs 122.7 139.0 161.5 180.2 Cash Profit 478.8 613.2 768.2 909.6
Other Expenditure 383.4 462.3 513.8 573.4 Increase/(Decrease) in CL 170.2 29.0 277.5 216.0
Op. Expenditure 4343.9 5279.3 6267.2 6949.2 (Increase)/Decrease in CA -91.1 147.7 -118.1 -89.2
EBITDA 749.0 895.1 1,073.1 1,242.4 CF from Operating Activities 557.9 789.9 927.6 1036.4
Growth (%) 3.3 19.5 19.9 15.8 Purchase of Fixed Assets 523.7 456.7 550.0 550.0
Depreciation 257.3 271.8 284.2 310.6 (Inc)/Dec in Investments 52.2 1.3 0.0 0.0
EBIT 491.7 623.2 789.0 931.7 Others 0.0 0.0 0.0 1.0
Interest 209.0 196.1 175.4 152.0 CF from Investing Activities -471.5 -455.3 -550.0 -550.0
Other Income 26.1 35.7 44.0 52.0 Inc/(Dec) in Loan Funds -5.7 -150.0 -275.0 -275.0
PBT 308.9 462.9 657.6 831.7 Inc/(Dec) in Sh. Cap. & Res. -39.2 0.0 0.0 0.0
Growth (%) 11.2 49.9 42.1 26.5 Less: Dividend Paid 48.5 112.9 145.2 177.4
Tax 85.8 171.5 223.6 282.8 Others 0.0 0.0 0.0 1.0
Reported PAT 223.1 291.4 434.0 548.9 CF from financing activities -93.4 -262.9 -420.2 -451.4
Growth (%) 24.9 30.6 48.9 26.5 Change in cash Eq. -7.0 71.7 -42.6 34.1
Adjustments 0.0 0.0 0.0 0.0 Op. Cash and cash Eq. 67.8 60.8 132.5 89.9
Adj. Net Profit 223.1 291.4 434.0 548.9 Cl. Cash and cash Eq. 60.8 132.5 89.9 124.0
EPS 16.2 21.2 31.5 39.9 Source: Company, ICICI Direct Research
Source: Company, ICICI Direct Research

Balance sheet | crore Key ratios

(Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E
Source of Funds Per share data (|)
Equity Capital 137.7 137.7 137.7 137.7 Book Value 119.5 132.4 153.4 180.4
Preference capital 0.0 0.0 0.0 0.0 Cash per share 4.5 9.6 6.5 9.0
Reserves & Surplus 1,507.2 1,685.6 1,974.5 2,346.1 EPS 16.2 21.2 31.5 39.9
Shareholder's Fund 1,644.9 1,823.3 2,112.2 2,483.7 Cash EPS 34.9 40.9 52.2 62.4
Loan Funds 2,350.9 2,200.9 1,925.9 1,650.9 DPS 3.0 7.0 9.0 11.0
Deferred Tax Liability 984.9 1,034.9 1,084.9 1,134.9 Profitability & Operating Ratios
Minority Interest 0.0 0.0 0.0 0.0 EBITDA Margin (%) 14.7 14.5 14.6 15.2
Source of Funds 4,980.7 5,059.1 5,123.0 5,269.5 PAT Margin (%) 4.4 4.7 5.9 6.7
Fixed Asset Turnover (x) 0.9 1.1 1.3 1.3
Application of Funds Inventory Turnover (Days) 3.0 2.5 2.5 2.5
Gross Block 5,917.0 6,392.0 6,967.0 7,542.0 Debtor (Days) 24.9 16.0 16.0 16.0
Less: Acc. Depreciation 1,014.5 1,279.6 1,563.8 1,874.4 Current Liabilities (Days) 95.2 75.0 75.0 75.0
Net Block 4,902.5 5,112.4 5,403.2 5,667.6 Return Ratios (%)
Capital WIP 504.9 479.9 454.9 429.9 RoE 13.6 16.0 20.5 22.1
Total Fixed Assets 5,407.4 5,592.3 5,858.1 6,097.5 RoCE 12.3 15.5 19.5 22.5
Investments 69.6 68.3 68.3 68.3 RoIC 12.5 16.0 20.0 23.2
Inventories 41.7 42.3 50.3 56.1 Valuation Ratios (x)
Debtor 347.5 270.7 321.8 359.1 PE 54.5 41.7 28.0 22.1
Cash 60.8 132.5 89.9 124.0 Price to Book Value 7.4 6.7 5.8 4.9
Loan & Advance, Other CA 421.4 349.9 408.9 454.9 EV/EBITDA 19.3 15.9 13.0 11.0
Total Current assets 871.4 795.3 870.9 994.1 EV/Sales 2.8 2.3 1.9 1.7
Current Liabilities 1,327.8 1,268.7 1,508.3 1,683.2 Leverage & Solvency Ratios
Provisions 39.9 128.0 165.9 207.1 Debt to equity (x) 1.4 1.2 0.9 0.7
Total CL and Provisions 1,367.7 1,396.7 1,674.2 1,890.3 Interest Coverage (x) 2.4 0.0 0.0 0.0
Net Working Capital -496.3 -601.4 -803.4 -896.2 Debt to EBITDA (x) 1.0 2.0 2.0 3.0
Miscellaneous expense 0.0 0.0 0.0 0.0 Current Ratio 0.6 0.6 0.5 0.5
Application of Funds 4,980.7 5,059.1 5,123.0 5,269.5 Quick ratio 0.6 0.5 0.5 0.5
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

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ICICI Directcoverage universe (Oil & Gas)
CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%)
Sector / Company (|) TP(|) Rating (| Cr) FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
Bharat Petroleum (BHAPET) 380 450 Hold 41,216 40.9 38.5 44.5 9.3 9.9 8.5 9.0 8.2 7.0 16.9 16.9 19.2 27.1 25.2 28.9
Castrol India (CASIND) 184 165 Hold 18,200 6.8 7.0 7.4 27.0 26.3 25.0 17.3 17.0 16.0 161.1 199.3 267.0 113.3 139.6 186.6
GAIL (India) (GAIL) 329 383 Buy 74,190 15.5 22.3 22.8 21.2 14.8 14.4 12.1 9.3 9.4 11.7 14.9 14.0 9.2 12.3 11.8
Gujarat Gas (GUJGA) 883 1,000 Buy 2,201 16.2 21.2 31.5 54.5 41.7 28.0 19.3 15.9 13.0 12.3 15.5 19.5 13.6 20.5 22.1
Gujarat State Petronet (GSPL) 180 200 Buy 10,140 8.8 12.2 11.7 20.4 14.8 15.4 12.1 11.9 10.3 13.8 11.3 12.5 11.0 13.6 11.9
Gulf Oil Lubricants (GULO) 894 1,000 Hold 4,432 24.4 31.4 34.4 36.7 28.4 28.4 24.0 18.8 16.2 32.5 42.1 46.3 34.2 36.3 32.2
Hindustan Petroleum (HINPET) 294 365 Hold 44,851 13.6 13.2 12.5 7.2 7.4 7.8 6.2 6.8 6.7 19.3 16.1 15.4 30.5 27.8 24.9
Indraprastha Gas (INDGAS) 272 315 Hold 19,040 8.2 9.2 9.9 33.3 29.5 27.5 20.8 18.4 16.4 27.2 26.2 24.9 19.5 18.9 17.8
Mahanagar Gas Ltd (MAHGAS) 871 1,200 Buy 8,604 39.8 50.0 51.7 21.9 17.4 16.8 13.1 10.2 9.7 29.8 33.5 30.7 21.4 23.7 22.0
Mangalore Refinery (MRPL) 105 140 Buy 18,403 20.8 13.0 12.1 5.0 8.1 8.7 5.3 4.3 3.7 21.6 20.0 18.1 36.2 16.6 22.8
Petronet LNG (PETLNG) 206 310 Buy 32,850 6.1 13.8 15.5 19.3 15.9 14.1 NA NA NA 21.4 28.5 33.8 21.1 23.3 24.0
Source: Company, ICICI Direct Research

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RATING RATIONALE
ICICI Direct Research endeavours to provide objective opinions and recommendations. ICICI Direct Research
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and
the notional target price is defined as the analysts' valuation for a stock.

Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

ICICI Direct Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com

ICICI Securities Ltd

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Disclaimer
ANALYST CERTIFICATION
We /I, Mayur Matani, MBA and Akshay Gavankar, PGDM) Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately
reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this
report.

Terms & conditions and other disclosures:

ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities
Limited is a SEBI registered Research Analyst with SEBI Registration Number – INH000000990. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has
its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which
are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking
and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts
and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and
meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without
prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current.
Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended
temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this
company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This
report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their
receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific
circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate
the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any
loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the
risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to
change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment
in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in
respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned
in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any
compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts
and their relatives have any material conflict of interest at the time of publication of this report.

It is confirmed that Mayur Matani, MBA and Akshay Gavankar, PGDM Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding
twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month
preceding the publication of the research report. ,

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject
company/companies mentioned in this report.
It is confirmed that Mayur Matani, MBA and Akshay Gavankar, PGDM. Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution,
publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities
described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and
to observe such restriction.

ICICI Securities Ltd

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