I found the following positives
- Gujarat gas now sources almost 95% of its gas requirements at market prices now and has been able to maintain the operating margins. In 2003, a substantial portion of gas was procured at subsidized rates and hence there was a risk of margin reduction. The company has been able to manage the transition very well.
- There has been a substantial reduction in the transmission income. The company has managed this well by expanding the other lines of revenue
- There is substantial expansion in progress at Vapi and Jaghadia. Vapi will contribute to revenue in 2007
- Gas volumes, no. of retail customers and bulk customers are all increasing at a heatlhy rate. This should provide good growth over the next few years
- The CNG business is now in growth phase and should provide for healthy growth of revenue and profits.
Overall the company is firing on all cylinders. It also has expansion plans in place and is investing heavily. I have updated my company analysis (valuation template-gujgasaug2007) and uploaded the same. The earlier analysis of the company from 2003-04 is also uploaded in the valueinvestorindia google groups.
Disclaimer: I am not recommending this stock. I do not hold the stock as of now and may or may not have a position in the future.
4 comments:
If an application for a gas license can increase mcap of rrl by 50% why cant guj gas have at least 5-10% rise...Maybe the market thinks that way..just joking
reliance stocks are in their own orbit. seems like everyone is buying them like there is no tomorrow
rohit
Hi rohit,
I know that you love reading annual reports of companies. Have you read the RNRL annual report. I dont find them mentioning about RNRL relationship with RFRL where all the action is. Recently when i have raised this question with a friend he had exited the stock at 44/- an i am sure he wants to kick my ass.
Regards,
Ranjit kumar
hi ranjit
i have not read the RNRL AR. typically i run my filters on undervalued stocks and then analyse the AR.
in case of reliance, i guess there action in almost all the group companies. somehow i dont see any rationality in the whole thing. i hold RIL and REL and cannot explain the sudden jump in the prices
regards
rohit
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