AUGUST 2016 Swarnendu Bhushan - Elara Capital Bhushan swarnendu.bhushan@ ... Gains in the pipeline...

Swarnendu Bhushan

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+91 22 6164 8504

AUGUST 2016

Elara Securities (India) Private Limited The Sequel

Part I

2

Up, Up and Away, our initiating thematic on gas, dwelled on India’s

big fight against pollution and how the gas sector was an impending

beneficiary of the same. Subsequent National Green Tribunal diktats

and structural fall in global prices acted as key catalysts to our thesis

pumping up stock prices by 50-80% under one year.

Part II

The Sequel, is Part II of a hugely successful thematic. The report

highlights newer dimensions of the sector and it has just got bigger.

We add two more investible opportunities in the space — Gujarat Gas

and Mahanagar Gas — as part of this series.


Gains in the pipeline

Urban sprawl chokes cities

Emergence of the metropolitan city: 50% growth in cities with more than

1mn population during 2001-11

Bumper-to-bumper: 11% CAGR in road traffic during 1950-2011 (Source:

Planning Commission); average Indian travelled ~7,000km in 2010-11 vs only

64km over 1950-51, resulting in 11% CAGR in road traffic; high passenger

traffic results in heavy pollution; 10 out of 20 most polluted cities globally are

Indian

Rising pollution levels: 10 out of 20 most polluted cities globally are based

in North India. Pan-India, only 2 out of 180 cities had low PM10, as per CPCB

India gears up for the challenge

Power, fertilizer demand-led opportunity: Out of unmet demand of

100mmscmd from the power sector, only 32mmscmd is met. Fertilizers at

42mmscmd to grow 30% by 2020

Most of India not on the gas grid: Existing trunk pipeline network of

16,000km to expand by 70% in the next 4-5 years. Double LNG

consumption from 58mmscmd to 106mmscmd in the next 3-4 years

National Green Tribunal sharpens fangs: post Judiciary taking up the

initial cudgels against pollution, orders issues cross-country

CNG bids: 60 cities in seven rounds to date. Emergence of private firms like

Adani, Jay Madhok, Synergy, Bucon, Essel Gas and several PSU JVs

Green corridors & Smart cities: Eight green corridors identified to facilitate

inter-city CNG transportation, an increase in CNG demand of 35%;

government aims development of 100 smart cities to boost CNG use

New emerging uses + low LNG prices = stock rerating

Cogeneration, tri-generation: environment friendly and cheaper than

gasoil, suitable where availability of grid electricity is erratic

Gas geysers, 2W pilot: incremental demand of 0.1-0.5mmscmd expected in

leading cities

Low LNG prices: addition of ~140mn tonnes pa of additional supply over

total global trade of 245mn tonnes in 2015 likely to keep prices suppressed

Our top picks

Gujarat Gas (GUJGA IN, Buy, TP: INR 751, Upside: 22%): volume

growth of 10-15%, led by industrial demand and addition of new areas; low

spot LNG prices to help demand

Indraprastha Gas (IGL IN, Buy, TP: INR 845, Upside: 25%): volume

growth of 7-8%; free cashflow of INR 5bn pa; working on several new

applications

Mahanagar Gas (MAHGL IN, Buy, TP: INR 652, Upside: 21%): volume

growth of ~5-8% pa over FY16-18E; highest EBITDA/scm; further growth

from adjoining areas of Mumbai and Raigad District

Petronet LNG (PLNG IN, Buy, TP: INR 386, Upside: 23%): expansion-

led volume growth to boost EBITDA by 70% over FY16-18E; higher earnings

visibility post expansion in December 2016

Source: Wood Mackenzie, WHO , Industry, Elara Securities Research

3


Table of Content

4

Past, present and future 5

Case for rerating 6

Mumbai – maximum city, bursting at the seams 10

India gears up to the challenge 11

Government wakes up 16

Green corridors – boost to volume 19

Smart cities – the new frontier 22

New applications, low LNG prices to help 24

Savings potential of Combined Heat & Power (CHP) 25

Two-wheelers on CNG 28

LNG for inland bunkering 30

Low LNG prices to help 32

Global peer valuation (Consensus) 34

Company Section

Gujarat Gas – Set for Greener Pursuits 37

Indraprastha Gas – Time to Tank Up 48

Mahanagar gas – New Kid on the Block 58

Petronet LNG – Set to Take-off 68

Appendix 77


Past, present and future

5

Source: Capitaline, Elara Securities Research

Sep 4, 2015: Elara thematic on natural gas, Up, Up & Away

Oct 1, 2015: Domestic gas price cut by ~USD 1/mmBtu

Oct 13, 2015: SC announces cess on gasoil vehicles entering Delhi

Nov 20, 2015: Successful renegotiation of LT Rasgas contract

Dec 5, 2015: Delhi govt implements the odd-even experiment

Dec 11, 2015: NGT announces further restriction on gasoil vehicles in

Delhi

Jan 6, 2016: Noida administration directs industrial units to shift to

natural gas by March 2016; challenged in court

Jan 13, 2016: After restart of two nuclear reactors in Japan in 2015,

two more reactors ready to start

Apr 7, 2016: Indraprastha Gas opens 36 new CNG stations to cut

queues

Jul 1, 2016: Mahanagar Gas lists, closes 25% higher than upper

limit of pricing band

4-S

ep-1

5

1-O

ct-1

5

13-O

ct-1

5

20-N

ov-1

5

5-D

ec-

15

11-D

ec-

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6-J

an-1

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13-J

an-1

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7-A

pr-

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1-J

ul-16

60

80

100

120

140

160

180

Apr-

15

May-1

5

Jun-1

5

Jul-15

Aug-1

5

Sep-1

5

Oct

-15

Nov-1

5

Dec-

15

Jan-1

6

Feb-1

6

Mar-

16

Apr-

16

May-1

6

Jun-1

6

Jul-16

IGL NIFTY Gujarat Gas Petronet GSPL GAIL

Indraprastha Gas &

Petronet LNG outperform

the Nifty by ~50-70% since

April 1, 2015

IGL is currently trading at

15x FY18E P/E and Petronet

LNG is trading at 11.5x

FY18E P/E. Is the rally

over? Where do we go

from here?

We identify a host of new

applications and

avenues, which may

not result in

incremental rise

in EPS in the next

12-18 months, but

would result in

rerating of the stocks


Case for rerating

Source: Elara Securities Research

Rerating

Assured supply of up to 110% for CNG & PNG

domestic

Structurally low LNG prices

Thrust on reducing pollution

Promising new applications

Two Wheelers

0.5mmscmd in Delhi alone

Smart cities

Faster implementation

CHP/Tri-generation

Bunkering,

trucking

Green CNG corridors

~35% increase in CNG consumption

6


Increasing urbanization

50% growth in cities with > 1mn population

Growing urban population

Source: Planning Commission, Elara Securities Research

Urbanization choking India’s cities

Strong vehicular growth: Leading urban centres like Mumbai and Delhi

witness a 6-8% CAGR during FY10-16

Sharp rise in distance travelled: Urban centres have expanded and

better roads have facilitated longer commutes, resulting in average

distance travelled increasing 110x in 50 years ending FY11 (Source:

Planning Commission)

Traffic to worsen: The Energy & Resources Institute estimates cars per

thousand to rise from 18 to 35 by 2025 in India; a few cities like Delhi

would have more than 300 cars per thousand

0

10

20

30

40

50

60

2001 2011

Number of cities with population more than 1mn

Source: Census 2011, Elara Securities Research

26

27

28

29

30

31

32

2001 2011

(% of total population)

Urban population

Ballooning road traffic

Source: Census 2011, Elara Securities Research Source: Census 2011, Planning Commission, Elara Securities Research

0

10,000

20,000

30,000

40,000

1950-5

1

1960-6

1

1970-7

1

1980-8

1

1990-9

1

2000-0

1

2010-1

1

2020-2

1

CAGR of 11% during 1951-2021 results in massive traffic

7


Industrial pollution worsens

43 critically polluted industrial clusters

Central Pollution Control Board: Develops Comprehensive Environmental Pollution Index (CEPI) to “capture various health dimensions of environment including air,

water and land” in industrial sectors in 2009. In partnership with State Pollution Control Boards, IIT Delhi and Ministry of Environment & Forests, it identifies 88 industrial

clusters for the study.

Critically polluted clusters: Declares 43 clusters critically polluted and 32 others severely polluted. The government has banned any development projects in

these critically polluted clusters. Action plans chalked out for corrective measures. Natural gas identified an important tool to reduce air pollution.

Source: Central Pollution Control Board, Elara Securities Research

State No. of

clusters Industrial clusters/Areas

CEPI

Andhra Pradesh

2 Vishakha patnam 52

Patancheru-Bollaram 76

Chhattisgarh 1 Korba 69

Delhi 1

Nazafgarh drain basin (including Anand Parvat, Naraina, Okhla and Wazirpur)

73

Gujarat 6

Ankaleshwar 81

Vapi 85

Ahmedabad 70

Vatva 83

Bhavnagar 63

Junagarh 53

Haryana 2 Faridabad 74

Panipat 81

Jharkhand 1 Dhanbad 72

State No. of


CEPI

Karnataka 2 Mangalore 68

Bhadravati 45

Kerala 1 Cochin, Greater 58

Madhya Pradesh

1 Indore 79

Maharashtra 5

Chandrapur 82

Dombivali 72

Aurangabad 69

Navi Mumbai 73

Tarapur 73

Orissa 3

Angul Talchar 73

Ib Valley 60

Jharsuguda 73

Punjab 2 Ludhiana 76

Mandi Gobind Garh 78

State No. of


CEPI

Rajasthan 3

Bhiwadi 71

Jodhpur 78

Pali 83

Tamil Nadu 4

Vellore 80

Cuddalore 70

Manali 77

Coimbatore 53

Uttar Pradesh 6

Ghaziabad 84

Singrauli 83

Noida 79

Kanpur 72

Agra 69

Varanasi-Mirzapur 57

West Bengal 3

Haldia 62

Howrah 61

Asansole 56

8


India chokes up

Rising air pollution: too high a price

Dying too young: WHO study estimates 0.62mn premature deaths every

year in India in 2010

Smog blankets all-India: All 121 cities being monitored, with the

exception of one, had PM2.5 above WHO acceptable limits

Waiting to exhale: 10 most polluted cities have PM2.5 numbers that are

11-18x WHO permissible limits. In Delhi alone, respiratory-related illnesses

in 32% of children in Delhi, with reduced lung function in 43.5%

Source: WHO, 2015, CSE, Elara Securities Research

100 150 200 250

Zabol, Iran

Gwalior, India

Allahabad, India

Riyadh, Saudi Arabia

Al Jubail, Saudi Arabia

Patna, India

Raipur, India

Bamenda, Cameroon

Xingtai, China

Baoding, China

Delhi, India

Ludhiana, India

Dammam, Saudi Arabia

Shijiazhuang, China

Kanpur, India

Khanna, India

Firozabad, India

Lucknow, India

Handan, China

Peshawar, Pakistan

PM2.5(µg/m3)

Alarm bells: only 2 out of 180 cities

in India had low PM10, as per CPCB

Source: WHO 2016, Elara Securities Research

10 cities in India make it to the top 20 most polluted cities

India’s commitment to the World

COP 21: As a part of Intended Nationally Determined Contribution, India

commits to 33-35% reduction in energy intensity by 2030 over 2005 levels

Commits to increase forest cover: Additional carbon sink of 2.5-3bn

tonnes of CO2 equivalent through additional forest & tree cover by 2030

Non-fossil power: Aims to have 40% cumulative power installed capacity

from non-fossil fuel based energy resources by 2030

9


Mumbai – maximum city, bursting at the seams

Source: Indian Institute of Human Settlement, Elara Securities Research

Stats get denser: Mumbai population of 12.50mn in 2011 is expected to

rise to 13.94mn by 2034. CGD companies would be direct beneficiaries

Traffic congestion to increase in the upcoming years: Vehicular

population grows 4.5x over 1992-2011. For example, the number of CNG

vehicles in Mumbai & adjoining areas grew at a CAGR of 14% over 2009-16.

Higher emphasis on greener fuels

Worsening air quality: According to the Central Pollution Board of India,

Mumbai reported an average AQI Index value of 100 in February 2016 where

air was contaminated with pollutants (PM2.5 and PM10). In Mumbai alone,

~3,000 tonnes of pollutants are spewed into the air daily, of which

52% are from automobiles, 2% domestic fuels and the rest industries

50% population growth in Greater Mumbai in 20 years

0

5

10

15

20

25

30

1961 1971 1981 1991 2001 2011 2015

(mn)

Vehicles registered in Greater Mumbai

Vehicular population grows 4.5x over 1992-2011

CNG penetration rises to 70% just in a decade

0

1,000

2,000

3,000

4,000

5,000

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14

(BEST* Buses)

Diesel CNG

Busting at the seams

Source: Indian Institute of Human Settlement, Elara Securities Research Note: * Brihanmumbai Electricity Supply and Transport Source: ITEA Conference, Oslo 2015, Elara Securities Research

10


India gears up to the challenge

Opportunity bonanza

Judiciary led in the past

Source: NGT, Elara Securities Research

Government wakes up

Launches Air Quality Index: Central Pollution Control Board defines

monitoring parameters and acceptable limits

NAMP: National Air Quality Monitoring Programme executes monitoring of air

quality through 342 stations across 127 cities & towns in 26 states and 4 four

Union Territories

COP 21: India commits to reduce emissions intensity by 33-35% by 2030

over 2005 levels; increase forest cover; 40% of total installed power capacity

to be non-fossil by 2030

National Green Tribunal emerges as new champion

Ban on older vehicles in Delhi: ban on gasoil vehicles older than 10

years and gasoline older than 15 years

May extend ban to other cities: six municipal areas in Kerala and 11

other heavily polluted cities under the radar

Eco-sensitive zones: Ban on vehicles older than 15 years on the Manali-

Rohtang Highway and use of only CNG buses for tourism

UP government: Considers introducing CNG buses in cities

Power, fertilizer demand-led opportunity for natural gas: Out of

unmet demand of 100mmscmd from the power sector, only 32mmscmd is

met. Fertilizers at 42mmscmd to grow 30% by 2020E. Hence, current

consumption of ~127mmscmd is expected to rise to 190mmscmd

Much of India not on the gas grid: Existing trunk pipeline network of

16,000km to expand by 70% in the next 4-5 years; the government is

helping via viability gap funding. New identified cities for CGD will result in

unprecedented rise in urban pipeline network

Opportunity for LNG players: Domestic gas supply (excluding internal

consumption) for external sales is at 70mmscmd; ~45% of current

consumption is being met through LNG. Space exists to double LNG

consumption from 58mmscmd to 106mmscmd in the next 3-4 years.

Petronet LNG expands capacity 18.5mmscmd to meet demand

1998: SC mandates CNG for public transportation in New Delhi

2001: Mumbai HC orders phasing out of transport vehicles older than 15

years and phasing out or conversion to CNG of transport vehicles older than 8

years

2012: Gujarat HC orders vehicles (private & public) to be converted to CNG

2015: Karnataka HC orders public transport & three wheelers to run on CNG

11


More join the party

Fertilizer second-biggest consumer after power

Petrochem gas consumption to rise by 10mmscmd: The upcoming

BCPL, Pata expansion and OPaL are expected to increase demand for gas by

10mmscmd from the petrochemicals industry

Refineries’ unmet demand: We estimate current consumption of

~10mmscmd will sustain despite new refining capacity due to RIL’s demand

coming off. There would be geographic shift, leading to pipeline demand.

We expect 10-15% pa CGD growth: while the government forecast a

demand CAGR of 19% to reach 51mmscmd by 2022

Infra pipeline major draw

Gas consumption to rise by 14mmscmd: Current gas consumption by

fertilizer sector is 42mmscmd. Revivals & conversion are expected to raise

consumption by the fertilizer sector from 42mmscmd to 56mmscmd

Supply deficit: 30 urea units turn out ~23mn tonnes currently while

demand is likely to rise to 38mn tonnes by FY25E from 32mn tonnes in FY15

Convert & revive: Government plans conversion of defunct fertilizer plants

of MFL, MCFL & SPIC to gas from naphtha. Additionally, revival of Sindri,

Barauni and Gorakhpur fertilizer plants on the cards

Petrochem, CGD emerges as another growth area

Huge demand for pipelines: Among awarded cities for CGD, 22 are non-

operational. IGL has developed a network of 10,000km of urban pipelines

while MGL & Gujarat Gas have 4,600km and 16,000km, respectively. As new

cities become operational, it would result in huge demand

Case for more terminals: Only two fully functional LNG terminals exist with

total capacity of 15mn tonnes pa. Unavailability of domestic gas combined

with huge unmet demand as gas grid expands would result in demand for

LNG terminals, far more than currently planned additions of 10mn tonne pa

The spillover effect

EPC contracts: Revival of Sindri, Gorakhpur & Barauni fertilizer plants spell

opportunity of INR 180bn. Most projects would go to Engineers India

(ENGR IN). Fertilizer firms like Madras Fertilizers (MDF IN),

Mangalore Chemicals & Fertilizers (MCF IN) & SPIC (SPET IN) are

direct beneficiaries

Pipelines: Suppliers Jindal Saw (JSAW IN), Welspun Corp (WLCO IN)

and Man Industries (MAN IN) would benefit from higher orders for urban

and trunk pipelines

Kit manufacturers: Most CNG kits currently imported and retrofitted.

Market currently unorganized. As demand rises, new market opens up

12


LNG consumption to double by 2020E

Domestic production a laggard: No meaningful increase in

domestic gas production over the next two years

LNG to bridge the gap: While Dahej would expand from

37.0mmscmd to 55.5mmscmd from December 2016, GSPC’s

Mundra LNG terminal is expected to be commissioned in FY17.

Kochi would see higher volume due to a pickup from BPCL’s

refinery expansion

0

50

100

150

200

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17E

FY18E

(mmscmd)

Domestic gas LNG

Dahej - Brownfield 5mn tonne pa Mundra - Greenfield 5mn tonne pa Kochi - higher utilization due to BPCL's refinery expansion Dabhol - breakwater facilitating full utilization of 5mn tonne pa

Disclaimer: Map not to scale Source: Petronet LNG, Shell Hazira, GSPC LNG, GAIL, H -Energy, Elara Securities Research

Tamil Nadu

Kerala

Karnataka

Andhra Pradesh

Maharashtra

Madhya Pradesh

Rajasthan

Gujarat

Uttar Pradesh

Punjab

Bihar

Orissa

Jharkhand West

Bengal

Sikkim Arunachal Pradesh

Assam

Tripura

Meghalaya

Mizoram

Manipur

Nagaland

Goa

Pondicherry

Uttaranchal

Jammu &

Kashmir

Haryana

Himachal Pradesh

Delhi

Chhattisgarh

Existing

Announced

Telangana

MPT- Mumbai 5.0

Petronet LNG – Gangavaram 5.0

Shell/GAIL – Kakinada 3.5

H-Energy - Jaigad 8.0

ONGC – Mangalore 5.0

IOC –Ennore 5.0

IOC –Dhamra 5.0

VGS – Kakinada 3.5

GAIL – Paradip 3.5

H-Energy Digha 6.0

LNG Bharat – Nellore 5.0

HPCL and SP – Chhara 5.0

Swan Energy – Jaffrabad 4.5

Dahej

Dabhol

Hazira

Kochi 5.0

Mundra 5.0

Under construction

Domestic gas production is unlikely to

ramp up beyond 100mmscmd by FY18E.

As a result, supply gap to be bridged by

importing LNG

Gas availability to rise by ~50%

Source: Elara Securities Estimate

13


Large swathes of India still without gas

Source: Petroleum Planning & Analysis Cell, Elara Securities Research

Only ~16,000km of pipelines: South India, large parts of Central India,

North India and Northwest India do not have access to gas network

Land acquisition hurdle: The Kochi-Mangalore-Bangalore pipeline is

currently facing land acquisition problems; as a result, Kochi LNG terminal is

just ~5% utilized

~11,000km of pipelines under construction: slow progress due to

unavailability of gas

Renewed boost from the fertilizer sector: The Jagdishpur-Haldia pipeline

to help revive Barauni, Sindri & Gorakhpur fertilizer plants is to be built in

three phases; Phase 1 scheduled to be completed by December 2018

Budgetary grants: The government has decided to extend budgetary

grants instead to GAIL & GSPL to meet shortfall in cost of setting up new

pipelines

14


Green tribunal & judiciary’s anti-pollution orders turn on the heat

Tamil Nadu

Karnataka

Andhra Pradesh

Maharashtra

Madhya Pradesh

Rajasthan

Gujarat

Uttar Pradesh

Punjab

Bihar

Orissa

JharkhandWest

Bengal

SikkimArunachalPradesh

Assam

Tripura

Meghalaya

Mizoram

Manipur

Nagaland

Goa

Pondicherry

Uttaranchal

Jammu&

Kashmir

Haryana

HimachalPradesh

Delhi

Chhattisgarh

Telangana

2015: NGT bans plying of gasoil & gasoline tourist vehicles on the Manali-Rohtang highway; state deploying CNG & electric buses for tourism

2012: Gujarat HC orders private and passenger vehicles to be converted to CNG within a year

2001: Mumbai HC orders phasing out of transport vehicles older than 15 years and phasing out or conversion to CNG of transport vehicles older than 8 years

2015: Karnataka HC orders the State government to run public transport buses in a time-bound manner

2016: NGT bans light and heavy gasoil vehicles older than 10 years in six major cities & ban on registration of gasoil vehicle with capacity of more than 2,000cc except for public transport & local authorities

1998: Supreme Court orders use of CNG for public transportation in Delhi 2015: NGT orders restriction of registration of gasoil vehicles in Delhi 2015-16: Supreme Court orders conversion of aggregators’ cabs to CNG; then relaxes to allow until permits are valid

2016: NGT asks UP government to consider introducing CNG vehicles in congested cities


15


Government wakes up

CGD Bids

Promoting CGD Smart Cities

Smart cities: The government aims to improve quality of life through

planned infrastructure development; identifies 100 cities for

implementation

Role of natural gas: Mandates natural gas for residential use; calls for

earmarking of open sites for setting up CNG stations across the city

Newer applications: Centralized infrastructure could result in newer

applications like chillers; already in use in GIFT city, Gujarat

Green CNG corridors

Deregulates auto fuels: Gasoline deregulated in 2010 and gasoil in 2014;

limits subsidized LPG to 12 pa per family; DBTL purges ghost accounts

Favourable domestic gas pricing: Domestic gas prices linked to

international hub prices; ~40% weightage to Henry Hub, results in CNG being

50-60% cheaper

CGD gets priority: The government assures up to 110% supply of domestic

gas for CNG & PNG domestic

Green Corridors: Identifies several highways where CNG stations can be set

up to create CNG corridors; direct boost of 35% to CNG volume

CGD bid rounds 1-7: Awarded 27 areas prior to formation of PNGRB*; all

except Kolkata are operational. Since 2009, 100 cities offered; 40 did not

receive any bids. 11 geographical areas among these operational

Draft Marketing Guidelines, 2015: Envisages giving marketing rights

of CNG to anyone eligible for selling gasoline, gasoil & ATF in addition

to entities authorized by PNGRB or the Central government

CGD penetration: Out of 27 cities awarded prior to formation of PNGRB*,

26 are operational. From 33 cities awarded post formation of PNGRB, 11 are

operational. Regulator turns strict enforcer. Jay Madhok, which failed to

meet terms for Ludhiana & Kutch East, forfeited bank guarantee & lost cities

Good potential even in mature cities: After achieving ~4.1mmscmd of

sales in Delhi, we expect 7-8% growth in the next two years, led by

restrictions on gasoil vehicles and conversion of private vehicles to CNG.

Government focused on PNG domestic to reduce access to subsidized LPG.

Mumbai, with sales volume of 2.4mmscmd, expects high volume

growth led by higher penetration & likely regulatory changes

Note: *Petroleum and Natural Gas Regulatory Board

16


Domestic gas attractively priced

1.5

3.5

5.5

7.5

9.5

Jun-1

0

Oct

-10

Feb-1

1

Jun-1

1

Oct

-11

Feb-1

2

Jun-1

2

Oct

-12

Feb-1

3

Jun-1

3

Oct

-13

Feb-1

4

Jun-1

4

Oct

-14

Feb-1

5

Jun-1

5

Oct

-15

Feb-1

6

Jun-1

6

(USD/mmBtu)

Henry Hub Domestic gas price

Domestic gas price drops

CNG prices decline post confirmed allocation of domestic gas

30 40 50 60 70 80

0

15

30

45

60

Jun-1

0

Oct

-10

Feb-1

1

Jun-1

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Oct

-11

Feb-1

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Jun-1

2

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-12

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Feb-1

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Jun-1

4

Oct

-14

Feb-1

5

Jun-1

5

Oct

-15

Feb-1

6

Jun-1

6

(INR/lit) (INR/kg)

CNG Diesel-RHS Petrol-RHS

CNG price collapses due to firm allocation from government of domestic gas

Source: PPAC, IGL, Elara Securities Research

Source: Bloomberg, PPAC, Elara Securities Research

Higher savings for vehicles


Savings for residential & commercial consumers


0%

20%

40%

60%

80%

Gasoline Gasoil Auto LPG

Savings using CNG vs auto fuels

0%

5%

10%

15%

20%

25%

30%

LPG - subsidised LPG - non-subsidised

Savings using CNG vs cooking fuel

17


CGD: 37 operational to date

1

234

5

6

7

8

109

11

12

1314

15

16

17

18

19

20

21

22

2324

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

45

4647

48

49

50

51

53

44

52

54

55

56

57

58

5960

61

62

63

64

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68

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73

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77

76

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81

82

83

84

85

86

87

8889

1 Agartala 31 Kota 61 Tumkur

2 Upper Assam 32 Mathura 62 Haridwar

3 Firozabad (TTZ) 33 Sonepat 63 Dharwad

4 Agra 34 Dewas 64 Udhamsingh nagar

5 Hyderabad 35 Meerut 65 Saharanpur

6 Indore 36 Allahabad 66 Ahmedabad

7 Gwalior 37 Chandigarh 67 Ramabai Nagar

8 Ghandinagar 38 Ghaziabad 68 Ratnagiri

9 Mehsana 39 Jhansi 69 Amreli

10 Sabarkantha 40 Yanam 70 Bhatinda

11 Pune incld Pimpri-Chichwad 41 Asansol-Durgapur 71 Patan

12 Kanpur 42 Bhavnagar 72 Yamunanagar

13 Bareilly 43 Kutch East 73 Rewari

14 Delhi 44 Kutch West 74 North Goa

15 Mumbai 45 Jamnagar 75 Rupanagar

16 Vijaywada 46 Ludhiana 76 Fatehgarh Sahib

17 Thane & adjoining areas 47 Jalandhar 77 Dahej

18 Kolkata 48 Ernakulam 78 Dahod

19 Lucknow 49 Bengaluru 79 Dhar

20 Anand incld Kanjari & Vadtal 50 Raigarh 80 Ahmednagar

21 Valsad 51 Pune 81 Banaskantha

22 Hazira 52 Thane 82 Anand

23 Rajkot 53 Daman & Diu 83 Panchmahal

24 Surendranagar 54 Dadra & Nagar Haveli 84 Rohtak

25 Navsari 55 Panipat 85 Jaipur

26 Nadiad 56 Amritsar 86 Solapur

27 Khurja 57 East Godavari (excluding Kakinada) 87 Davanagere

28 Moradabad 58 Belgaum 88 Udaipur

29 Surat-Bharuch-Ankleshwar 59 Krishna 89 Bhopal

30 Kakinada 60 West Godavari (includes Rajahmundry)

Source: Petroleum & Natural Gas Regulatory Board, Elara Securities Research

Operational Not Operational

18


Green corridors – boost to volume

Target traffic between cities on national highways

Coverage likely to extend to national highways Need clarity on policy

Need for definite regulation: Although draft marketing guidelines were

published in March 2015, they have not taken the shape of regulation yet

Unanswered questions: Policy needs to be clear on authorization of entity,

marketing exclusivity and allocation of natural gas

2.8mmscmd of direct demand

Numerous stretches: Government has identified the following stretches-

Delhi-Agra-Lucknow-Kanpur, Delhi-Jaipur, Delhi-Chandigarh, Delhi-Haridwar,

Karanpur-Moradabad-Kashipur-Rudrapur, Vizag-Vijaywada, Allahabad-Kanpur-

Varanasi, Bengaluru-Mumbai-Pune

IGL & MGL biggest beneficiaries: Due to their geographical advantage,

IGL & MGL could see pickup in volume

High average daily traffic (ADT): We estimate an ADT of 15,000-62,000

on highways selected

Demand of 2.8mmscmd of CNG: Even if 20% of vehicles convert to CNG,

direct demand on these highways alone could increase by 2.8mmscmd, which

is ~35% of total CNG usage in the country

Indirect impact: CNG use on highways also would boost conversion of

vehicles inside cities, and, result in indirect increase in CNG sales volume

within cities

Expanding beyond cities: Currently, non-availability of gas on India’s

highways has curtailed the use of gas for inter-city traffic; CNG stations on

highways would increase CNG use on highways and intra-city

Existing fuel retail outlets offer cheaper infrastructure cost: ROs on

highways are much more spacious than those within cities; offer sufficient

space for CNG compressor and related infrastructure

19


Delhi-Agra-Lucknow-Kanpur green corridor (1 out of 8)

Auraiya

Firozabad 105km

143km

47km 57km

161km

Companies Traffic (ADT)

Estimated vol (mmscmd)

Delhi: IGL Agra: Green Gas Kanpur: CUGL Lucknow: Green Gas

28,582 0.5


For more details on the other seven green corridors, please visit the Appendix section

20


Green corridors to boost CNG demand by ~35%

Green CNG corridors Operating companies Average daily traffic (#)

Distance (km) Total vol (mmscmd)

Achievable vol (mmscmd)

Delhi-Agra-Kanpur-Lucknow Delhi: IGL; Agra: Green Gas; Kanpur: CUGL; Lucknow: Green Gas

28,582 513 2.3 0.5

Karanpur-Moradabad-Kashipur-Rudrapur

20,708 144 0.5 0.1

Vizag-Vijaywada Vizag: not authorized so far; Kovvur: BGL; Vijaywada: BGL

28,496 300 1.3 0.3

Delhi-Jaipur Delhi: IGL; Jaipur; Round 7 61,871 278 2.7 0.5

Delhi-Chandigarh Delhi: IGL; Chandigarh: IOCL-Adani 46,533 244 1.8 0.4

Delhi-Haridwar Delhi: IGL; Haridwar: GAIL/BPCL 16,540 223 0.6 0.1

Allahabad-Kanpur-Varanasi Allahabad: IOCL-Adani; Kanpur: CUGL; Varanasi: Not allocated

15,133 223 0.5 0.1

Bengaluru-Mumbai-Pune Mumbai: MGL; Pune: MNGL; Bengaluru: GAIL Gas

27,912 980 4.3 0.9

Total consumption 2.8

Additional volume inside

cities due to same vehicles


21


Smart cities – the new frontier

The roadmap towards “Smart”

The concept

Potential

Faster & cheaper implementation: Actual digging & ground refill cost is

INR 4,000-5,000/m while various approvals take the cost to INR 14,000-

15,000/m. Common utility corridor would help faster implementation & higher

penetration of PNG domestic

Boost to CNG volume: Emphasis on mass transportation and cleaner

environment would result in higher penetration of CNG

Newer applications: Possible use for expanding non-kitchen residential use

like district cooling systems, gas gensets for ensuring 24x7 power supply, co-

generation plants and backup for solar power plants

CGD & Smart cities mission

Smart City: Aims at “promoting cities that provide core infrastructure and

give a decent quality of life to its citizen, a clean and sustainable

environment and application of Smart Solutions”

Mandatory convergence: With Atal Mission for Rejuvenation & Urban

Transformation, Swachh Bharat Mission, National Heritage City Development

& Augmentation Yojana, Digital India, Skill development, Housing for all,

construction of museums, & other programs connected to social infrastructure

City gas network: Ensures uninterrupted supply of eco-friendly cooking

fuel- PNG domestic and cleaner transportation fuel in form of CNG

Common utility corridor to aid infrastructure development: Gas

pipelines can be laid along with other underground utilities like water,

electrical cables, optical fibre cables; common geographical information

system for all utilities

PNG domestic: mandatory piped gas network in the upcoming and new

residential colonies & apartments

CNG stations: Earmarking open plots for setting up CNG stations in Smart

cities for equitable availability of CNG throughout the city

States nominate cities

Cities prepare proposals for development

Centre selects cities for Smart City Challenge

Step 1:

Step 2:

Cities selected get funding of INR 5bn from the Centre and the right to levy a slew of taxation on citizens for funding

development plan

33 cities on their way to become "Smart"

Centre aims development of 100 "Smart" cities by 2020

22


Smart cities

Source: Ministry of Urban Development, Elara Securities Research

Kochi

Ludhiana

New Town Kolkata

Belagavi

Bhagalpur

Bhopal

Bhubaneshwar

Chennai

Coimbatore

Davanegere

Dharamshala

Faridabad

Greater Warangal

Guwahati

Imphal

Jabalpur

Jaipur

Panaji

Port Blair

Raipur

Ranchi

Solapur

Udaipur

Visakhapatnam

Agartala

Ahmedabad

Chandigarh

Indore

Kakinada

Lucknow

New Delhi Municipal Council

Pune

Surat

Operational CGDNot awarded for CGDAwarded for CGD, Not operational

23


New applications, low LNG prices to help

District cooling systems

Cogeneration & tri-generation plants

New applications, low LNG prices to rerate stocks

Low LNG prices: Global supply to rise by 140mn tonne pa in the next few

years. Global demand of 245mn tonnes in 2015 to decline as Japan and

Korea, accounting for ~50% of total trade, restart their nuclear reactors

Industrial applications: As economy starts to revive, low LNG prices would

result in pickup of demand from the industrial segment. We have already

seen IGL’s PNG industrial demand stabilizing at 0.44mmscmd despite low fuel

oil prices

Although newer applications would take time and may not impact earnings

significantly until FY18 as the roadmap starts clearing, we expect stocks to

rerate

2W, gas geysers, marine applications, LNG trucking

Huge potential: Finds use in several small and medium scale industries like

sugar, paper, urban waste treatment, chemicals, fertilizers, textiles, hospitals,

hotels, large residential projects, food processing, malt & brewery industries

Erratic power and low LNG prices to help: More economical than gasoil;

CHP* had lost its charm due to the decline in domestic gas production and

increased dependence on high-cost LNG. However, a structural decline in LNG

prices to help pickup in CHP

Two-wheelers: Trial runs are being conducted currently in Delhi. We

estimate a demand of 0.5mmscmd in Delhi alone

Gas geysers: CGD companies are looking to promote use of gas for geysers

Miscellaneous applications: Although in the nascent stage, the

government is mulling the use of LNG for marine applications as well as in

LNG-run trucks

The concept: Uses chilled water production and distribution from a central

source for facilitating air conditioning; does not use any CFC; may be

electricity- or gas-driven

Savings potential: 35% lower than conventional air-cooled, air conditioners

and 20% lower than individual water-cooled, air-conditioning systems

GIFT City, Ahmadabad: Gujarat International Finance Tec-City is the first

project in India which is using gas-based district cooling system

Note: *CHP stands for Cogeneration of Heat & Power

24


Savings potential of combined heat & power (CHP)

147 units against 100 units for CHP

Combined heat & power

CHP fuel

Electrical 30

Thermal 45

Power plant

Boiler

Efficiency: 33%

Efficiency: 80%

Fuel to power plant: 91

Boiler fuel: 56

Loss

: 61

Loss: 1

1

CHP fuel: 100

Loss: 2

5

Source: US Environmental Protection Agency, Elara Securities Research

25


DLF City

100MW gas-based captive power plant: Uses gas instead of gasoil for

providing uninterrupted power supply

Vapor absorption machines: Waste heat from engines and turbines is

converted into chilled water for providing air conditioning

Savings potential: Costs ~40% lower than gasoil, no CFCs and higher

efficiency as conventional systems have ~30% transmission losses

Cogeneration plant at DLF City, Gurugram

Source: DLF, Elara Securities Research

26


GIFT City – India’s first & only district cooling system

Capacity: Centralized air conditioning

designed for cooling load of 2,70,000TR.

Uses gas based chillers, no CFCs

Benefits: Reduces noise and vibration, low

energy costs, low maintenance cost,

efficiency through economies of scale

DCS system at GIFT City

Source: GIFT, Elara Securities Research

27


Two-wheelers on CNG

Trial runs: Government has given 50 bikes fitted with CNG kits to Domino’s

Pizza for trial runs

Supply chain: CNG kits are approved by Automotive Research Association

of India and are being manufactured by Ituk Manufacturing

Configuration: The CNG kit comprises two cylinders each with capacity of

1kg of CNG and support running of upto 120km on a single fill

Benefits: CNG Honda Activa cost is INR 65,000-75,000. Running cost is

expected to be INR 0.61/km vs INR 1.3/km for gasoline

Huge scope: 4.7mn two-wheelers in Delhi alone in 2012. We estimate

demand of 0.5mmscmd if 20% of these convert.

Pilot program launched

Distance travelled/yr (km) 9,125

Mileage (km/kg) 60

Gas consumed by one bike/yr (kg) 152

Gas consumed by one bike/yr (scm) 198

Total number of bikes in Delhi (mn) 4.7

Conversion into CNG (%) 20

CNG bikes (mn) 0.9

Total gas consumed in Delhi (mmscmd) 0.5

Source: Ministry of Petroleum & Natural Gas, Elara Securities Research Source: Elara Securities Research

Estimated CNG demand from two-wheelers in Delhi (2012)

Source: Ministry of Petroleum & Natural Gas, Elara Securities Research

28


Huge potential

Demand potential in leading cities

Avg distance travelled per day (km) 25

Distance travelled/yr (km) 9,125

Mileage (km/kg) 60

Gas consumed by one bike/yr (kg) 152

Gas consumed by one bike/yr (scm) 198

Delhi Mumbai Pune Ahmedabad Bengaluru

Total number of bikes (mn) (data as on March 2012) 4.7 1.1 1.7 1.2 2.9

Conversion into CNG (%) 20 20 20 20 20

CNG bikes (mn) 0.9 0.2 0.3 0.2 0.6

Total gas consumed (mmscmd) 0.5 0.1 0.2 0.1 0.3

Source: Journal of Power Sources, RTO data, Elara Securities Estimate

29


LNG for inland bunkering

LNG bunkering in China India also plans to open LNG bunkering stations

Source: China Classification Society, Elara Securities Research Source: Elara Securities Research

30


LNG trucking

China has already started LNG bunkering since 2014 India could use LNG trucks on Eastern and Western highways

LNG trucking in China: China has a vast network of ~2,500 LNG

refuelling stations. ~100,000 trucks use LNG in China currently and the

number is expected to grow to 350,000 in two years

Source: ENN Energy, Elara Securities Research Source: Elara Securities Research

31


Low LNG prices to help

Largest importers restart nuclear reactors

Addition of 140mn tonnes of liquefaction capacity LNG prices decline due to increase in supply

Australia to lead: With LNG exports of 29.4mn tonnes in 2015, Australia

emerges as the second-largest exporter globally. With 53.8mn tonnes pa

of liquefaction capacity under construction, it would become the largest

exporter by 2020

US not far behind: A total of 62mn tonnes pa of liquefaction capacity is

under construction in the US while Russia (16.5mn tonnes pa), Malaysia

(6.3mn tonnes pa), Indonesia (0.5mn tonnes pa) and Cameroon (2.4mn

tonnes pa) account for the rest

Japan starts three nuclear reactors: Japan has already started

Sendai-1 & 2 nuclear reactors. Takahama 3 & 4 reactors restarted but

shut due to technical glitch. Ikata-3 is likely to start commercial operations

by August 2016. It is estimated that Japan’s current consumption of

~88mn tonnes pa would decline to ~62mn tonne pa by 2030.

South Korea adding nuclear capacity: Eight nuclear reactors, each

with a capacity of 1,400MW, are under various stages of construction

Source: International Gas Union, Elara Securities Research

Source: NRA, Reuters, Elara Securities Research

Source: Platts, Elara Securities Research

3

8

13

18

23

Jan-1

3

Mar-

13

May-1

3

Jul-13

Sep-1

3

Nov-1

3

Jan-1

4

Mar-

14

May-1

4

Jul-14

Sep-1

4

Nov-1

4

Jan-1

5

Mar-

15

May-1

5

Jul-15

Sep-1

5

Nov-1

5

Jan-1

6

Mar-

16

May-1

6

(USD/mmBtu)

Spot LNG Fuel Oil

Fuel oil becomes expensive to LNG After remaining at ~USD

15/mmBtu, LNG prices drop to ~USD 5/mmBtu

32


Key risks to our call

Several CGD players like Jay Madhok have not been making progress in CGD areas awarded. PNGRB has been revoking such awards. Any

delay in auctioning, awarding and implementation would prevent CGD from being established across the country.

Currently spot LNG prices hover at ~USD 5-6/mmBtu. We believe they would remain structurally low for long time to come. If for any

reason, LNG prices rise, then LNG consumption in industries may not be economical.

Crude prices have been very volatile. They currently hover at ~USD 45/bbl. With crude prices remaining low, it can dis-incentivize customers

to either not convert to natural gas or switch back to alternate fuels, in absence of regulatory enforcement.

The Dahej 5mn tonne pa expansion is expected to be completed by December 2016. GSPC LNG 5mmtpa Mundra terminal is expected to be

commissioned by mid-2017. With domestic supply not expected to increase in the near term, any delay in these two could be a setback to

India’s gas story.

33


Global peer valuation (Consensus)

Source: Bloomberg, Elara Securities Estimate

EV/EBITDA (x) P/BV (x) P/E (x)

FY17E / CY16E FY18E / CY17E FY17E / CY16E FY18E / CY17E FY17E / CY16E FY18E / CY17E

Indraprastha Gas 10.1 9.4 3.4 3.0 18.6 16.8

Gujarat State Petronet 7.4 7.2 1.7 1.5 11.2 10.2

Gail India 8.8 7.6 1.3 1.2 13.8 11.2

Petronet LNG 11.1 8.2 3.3 2.8 20.0 14.2

Gujarat Gas 7.4 7.2 1.7 1.5 11.2 10.2

Mahanagar Gas 9.4 8.7 3.0 2.7 15.5 14.2

China Gas Holdings 11.7 10.5 2.9 2.4 14.5 12.8

Hong Kong & China Gas 21.1 20.0 3.1 3.0 24.5 24.1

Towngas China 11.0 10.5 0.8 0.8 9.2 9.0

China Resources Gas Group 8.6 7.8 2.3 2.0 13.6 12.1

Enn Energy Holdings 7.6 7.1 2.1 1.8 11.7 10.8

Tokyo Gas 7.3 6.6 0.9 0.9 20.9 17.0

Osaka Gas 6.5 7.2 0.9 0.9 15.1 17.1

Toho Gas 9.1 10.2 1.6 1.6 25.3 28.0

Korea Gas 11.3 10.6 0.4 0.4 10.6 8.8

Kyungdong City Gas

Sempra Energy 10.9 9.6 2.0 1.9 20.7 17.6

New Jersey Resources 13.8 11.3 2.7 2.2 20.3 19.1

Piedmont Natural Gas 14.7 12.6 2.8 2.5 28.8 25.2

Snam Spa 11.8 11.6 2.3 2.2 16.1 15.7

Atmos Energy 10.6 9.7 2.2 2.1 22.0 20.6

Enagas SA 12.3 12.6 2.5 2.5 15.3 15.1

Duke Energy 10.2 9.8 1.4 1.4 17.7 16.9

Cms Energy 9.8 9.3 2.7 2.5 20.1 18.7

Centerpoint Energy 8.3 7.8 2.8 2.7 18.7 17.7

34


Valuation matrix – P/E vs EPS CAGR

India gas firms offer attractive valuation vs global peers, PE & EPS CAGR (FY18/CY17)


• Emphasis on greener fuels would result in a

higherer EPS CAGR for India firms during

FY16-18E than global peers

• India companies available at lower P/E of

14x than global peers at 19x

• Structural reforms, low domestic & spot

LNG prices and high latent demand

position India firms in a structurally long-

term bull cycle

Gujarat Gas

IGL

GSPL

GAIL

Petronet LNG

Mahanagar Gas

5

10

15

20

25

(10) (5) 0 5 10 15 20 25 30 35 40

P/E

(x)

EPS CAGR (%)

35


Valuation matrix – P/BV vs ROE

India gas companies are available at reasonable valuation vs global peers PBV (x) and ROE (%) (FY18/CY17)


Gujarat Gas

IGL

GSPL

GAIL

Petronet LNG

Mahanagar Gas

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0 5 10 15 20 25 30

P/B

V (

x)

ROE (%)

Indian companies available at attractive relative valuation compared to peers globally

36

GUJARAT GAS – SET FOR GREENER PURSUITS


Gujarat Gas

Investment summary

Promising new areas: The company has won Amreli, Ahmedabad rural, Dahod, Panchmahal and Dahej recently. The regions are contiguous and would be operational

soon with low capex. We expect peak potential of 1.0-1.5mmscmd from Ahmedabad rural, 1.0mmscmd from Dahej & 0.3-0.4mmscmd from each of other three.

Demand stabilization from Morbi: Morbi has seen fresh FDI in vitrified tiles. GGAS has signed contracts with ~25 new customers, which would add 0.2mmscmd near

term. Current consumption stands at 2.0mmscmd and most consumers are running at 50-55%. As ceramic demand rises and utilization increases, we expect demand rise.

New applications to drive growth: Earlier, the company had witnessed good demand from the CHP segment in the Surat-Ankaleshwar-Bharuch industrial belt. However,

with improvement in power availability and rise in LNG prices, there is no demand currently. The Thane industrial area faces erratic power supply and could add demand

from the CHP segment. GIFT City also has installed a district cooling system. The start of GIFT city and similar such applications would again lift demand.

Good volume growth likely: Morbi has demand potential of 5.0-6.0mmscmd. As oil prices rise, industrial production increases and regulatory enforcement picks up, 10-

15% volume growth is easily achievable, aided by volume from new areas.

Valuation

We expect an EPS CAGR of ~88% over FY16-18E, aided by volume growth and availability of cheaper domestic gas for CNG. We recommend Buy with a TP of INR 751 based on

19x FY18E EPS of INR 40.4.

Key risk

Sustained low crude oil prices, an increase in LNG prices and poor industrial pickup are key downside risks

Key Financials

CMP: INR 616 TP: INR 751 Upside: 22%

GGAS IN Mcap: USD 1.3bn Buy

Note: pricing as on 12 August 2016; Source: Company, Elara Securities Estimate

YE March

Revenue (INR mn)

YoY (%)

EBITDA (INR mn)

EBITDA margin (%)

Adj PAT (INR mn)

YoY (%)

Fully DEPS (INR)

ROE (%)

ROCE (%)

P/E (x)

EV/EBITDA (x)

FY15 90,063 15.5 11,062 12.3 4,436 1,460.3 32.2 22.3 17.2 19.1 9.1

FY16 61,059 (32.2) 7,249 11.9 1,529 (65.5) 11.1 7.3 7.6 55.5 14.0

FY17E 56,497 (7.5) 9,380 16.6 3,424 123.9 24.9 14.3 10.6 24.8 10.8

FY18E 64,422 14.0 12,456 19.3 5,561 62.4 40.4 19.2 14.4 15.2 8.1

38


Painting Gujarat green

Growing across Gujarat and nearby areas

With recently won Amreli, Ahmedabad rural, Dahej, Dahod and Panchmahal,

Gujarat Gas has more than three-quarters of the state under

coverage

Outside Gujarat, it has presence at Dadra & Nagar Haveli and Thane,

which are contiguous. This would result in lower cost and fast penetration in

new areas

Kutch East, which was earlier awarded to Jay Madhok, has been revoked

and presents a good opportunity as and when it comes up for bidding

Gujarat Gas

Other CGDs

EOI Submitted

No bidding yet

Kutch

Banas Kantha

Patan

Mahesana

Sabar Kantha

Arvalli

Mahisagar

Dahod Panch Mahal

Chhota Udaipur

Ahmadabad Kheda

Gandhinagar

Anand

Vadodara

Bharuch

Surat Tapi

Navsari

Valsad

Bhavnagar

Amreli

Gir Somnath

Junagarh

Porbandar

Jamnagar

Rajkot

Morvi

Devbhumi Dwarka

Surendranagar

Botad

The Dangs

Narmada

Daman

Dadra & Nagar Haveli

Thane

Ahmadabad rural under Gujarat Gas and Urban

under Adani Gas

39

Source: Company, Elara Securities Research


Large access to industries

Gujarat: most industrialized state

Leader in sectors such as chemicals, petrochemicals, dairy,

pharmaceuticals, cement & ceramics, gems & jewellery, textiles and

engineering

Contributes quarter of total goods exported from the country

Ranks first in total area under SEZ in India

Longest coastline of 1,600km in the country Kutch

Banas Kantha

Patan

Mahesana

Sabar Kantha

Arvalli

Mahisagar

Dahod Panch Mahal

Chhota Udaipur

Ahmedabad Kheda

Gandhinagar

Anand

Vadodara

Bharuch

Surat Tapi

Navsari

Valsad

Bhavnagar

Amreli

Gir Somnath

Junagarh

Porbandar

Jamnagar

Rajkot

Morvi

Devbhumi Dwarka

Surendranagar

Botad

The Dangs

Narmada

Daman

Dadra & Nagar Haveli

40



Delhi-Mumbai Industrial Corridor

Source: DMIC Development Corporation, Elara Securities Research

Ahmedabad Dholera Investment region

DMIC to offer long-term growth

opportunity

62% of state is covered within the

influence area

Five nodes identified for

development around dedicated freight

corridor

Ahmedabad-Dholera investment

region

Vadodara-Ankaleshwar industrial

area

Bharuch-Dahej investment region

Surat-Navsari industrial Area

Valsad-Umbergaon industrial area

The regions have the potential for

engineering, ceramics, chemicals, pharma,

gems & jewellery, textiles and automobile

industries

Vadodara-Ankleshwar Industrial Area

Bharuch-Dahej Industrial Area

Surat-Navsari Industrial Area

Valsad-Umbergaon Industrial Area

41


Lifting of moratorium would increase demand

Source: CPCB, Elara Securities Research

Gujarat has six industrial areas classified as critically polluted

In the study conducted in 2009, Ankleshwar, Vapi, Ahmedabad, Vatva,

Bhavnagar and Junagarh were declared as critically polluted

Development projects were banned and action plan was chalked out for

reducing pollution

Natural gas to the rescue: at the core at reducing air pollution

Vapi

Ankaleshwar

Ahmedabad

Bhavnagar Junagarh

Vatva

42


Volume growth to return

Source: Gujarat Gas, Elara Securities Research

PNG volume growth

Over FY12-14 due to high RLNG prices, industrial consumers have

shifted to alternate fuels, which are expected to come back with softening

in spot LNG prices

We expect a pickup in industrial activity as the economy bottoms out,

driving consumption of natural gas

Environmental concerns discouraging the use of alternate polluting fuels,

such as fuel oil

Morbi currently uses ~2.0mmscmd of gas with most units running at 50-

55% utilization. Higher utilization would almost double demand

New gas could add a total of ~3.5mmscmd of sales

CNG volume growth

The company currently has a total of 230 CNG outlets and plans to add 25

CNG stations in FY17

CNG penetration is very low at ~10% in Gujarat while Delhi & Mumbai

have a higher penetration of ~20%

Huge potential for CNG volume growth

High growth in industrial demand expected

Source: Company, Elara Securities Estimate


4.0

4.5

5.0

5.5

FY14 FY15 FY16 FY17E FY18E

(mmscmd)

Industrial / commercial

Prices touch highs of INR 42/scm in FY14 from the lows of INR 26/scm in FY12. FY16 again saw low fuel oil prices and poor industrial demand

0.4

0.5

0.6

0.7

0.8

0.9

1.0


(mmscmd)

CNG

Demand growth expected from possible regulatory restrictions

43


PAT to almost double during FY16-18E

EBITDA/scm to improve

PAT to almost double over FY16-18E

Volume growth of 10-15% over FY16-18E

EBITDA CAGR of 30% over FY16-18E





5.0

5.5

6.0

6.5

7.0

7.5


(mmscmd)

Total vol

2.0

2.5

3.0

3.5

4.0

4.5

5.0


(INR)

EBITDA/scm

FY14 takes a hit due to high LNG prices

2

502

1,002

1,502


(INR mn)

EBITDA

44

0

1,000

2,000

3,000

4,000

5,000

6,000


(INR mn)

PAT


Gujarat Gas: valuation

One-year forward P/BV of Gujarat Gas One-year forward P/E of Gujarat Gas


Volume (mmscmd) 5.9 6.7 5.6 6.2 7.1

EBITDA/scm (INR) 2.7 4.5 3.5 4.2 4.8

Key assumptions

Target P/E (x) 18.6

EPS (INR) 40.4

Target Price (INR) 751

Valuation (FY18E)


Source: Company, Bloomberg, Elara Securities Estimate


Source: Company, Bloomberg, Elara Securities Estimate

14x

16x

18x

20x

22x

200

300

400

500

600

700

18-S

ep-1

5

9-O

ct-1

5

30-O

ct-1

5

20-N

ov-1

5

11-D

ec-

15

1-J

an-1

6

22-J

an-1

6

12-F

eb-1

6

4-M

ar-

16

25-M

ar-

16

15-A

pr-

16

6-M

ay-1

6

27-M

ay-1

6

17-J

un-1

6

8-J

ul-16

29-J

ul-16

(INR)

CMP

2.5x

3.0x

3.5x

4.0x

400

500

600

700

800

18-S

ep-1

5

9-O

ct-1

5

30-O

ct-1

5

20-N

ov-1

5

11-D

ec-

15

1-J

an-1

6

22-J

an-1

6

12-F

eb-1

6

4-M

ar-

16

25-M

ar-

16

15-A

pr-

16

6-M

ay-1

6

27-M

ay-1

6

17-J

un-1

6

8-J

ul-16

29-J

ul-16

(INR)

CMP

45


Gujarat Gas: key financials


Income Statement (INR mn) FY15 FY16 FY17E FY18E

Net operating income 90,063 61,059 56,497 64,422

EBITDA 11,062 7,249 9,380 12,456

Depreciation 2,377 2,457 2,888 3,124

EBIT 8,685 4,792 6,492 9,332

Interest cost 3,332 2,460 2,229 1,998

Other income 1,071 447 847 966

PBT 6,415 2,522 5,111 8,301

Exceptional items 10 256 0 0

Less: taxation 1,979 993 1,687 2,739

Effective tax rate (%) 30.8 39.4 33.0 33.0

PAT 4,436 1,529 3,424 5,561

Balance Sheet (INR mn) FY15 FY16 FY17E FY18E

Equity Capital 1,377 1,377 1,377 1,377

Reserves 18,532 19,651 22,592 27,590

Total Borrowings 14,908 17,076 17,076 14,576

Deferred Taxes 3,528 4,103 4,103 4,103

Others 5,614 6,100 6,661 7,586

Total Liabilities 43,959 48,306 51,808 55,230

Fixed assets 48,441 51,423 55,041 58,417

Investments 10,990 1,620 1,620 1,620

Current Assets 9,495 7,706 7,608 8,001

Less: Current Liabilities 24,967 12,443 12,462 12,808

Net Working Capital (15,472) (4,737) (4,853) (4,807)

Total Assets 43,959 48,306 51,808 55,230

Cash Flow Statement (INR mn) FY15 FY16 FY17E FY18E

Operating Cash Flow 8,162 (7,387) 6,609 9,496

Capex (3,382) (5,440) (6,506) (6,500)

Free Cash Flow 4,780 (12,827) 103 2,996

Investing Cash Flow (5,963) 3,930 (6,506) (6,500)

Financing Cash Flow (1,938) 1,757 (483) (3,064)

Net Change in Cash 262 (1,700) (380) (68)

Opening Cash 2,116 2,378 678 298

Closing Cash 2,377 678 298 231

Ratio Analysis FY15 FY16 FY17E FY18E

Income statement ratios (%)

Revenue growth 15.5 (32.2) (7.5) 14.0

EBITDA growth 92.7 (34.5) 29.4 32.8

Adj PAT growth 1,460.3 (65.5) 123.9 62.4

EBITDAM 12.3 11.9 16.6 19.3

Adj net margin 4.9 2.5 6.1 8.6

Return & liquidity ratios

Interest Coverage Ratio (x) 2.6 1.9 2.9 4.7

Net debt/Equity (x) 0.2 0.8 0.7 0.5

ROE (%) 22.3 7.3 14.3 19.2

ROCE (%) 17.2 7.6 10.6 14.4

Per share data & valuation ratios

Adj EPS (INR) 32.2 11.1 24.9 40.4

Adj EPS growth (%) 1,460.3 (65.5) 123.9 62.4

BVPS (INR) 145 153 174 210

DPS (INR) 5.0 2.5 3.0 3.5

P/E (x) 19.1 55.5 24.8 15.2

EV/EBITDA (x) 9.1 14.0 10.8 8.1

P/BV (x) 4.3 4.0 3.5 2.9

Dividend Yield (%) 0.8 0.4 0.5 0.6

46


Coverage History

Date Rating Target Price Closing Price

1 15-Sep-2015 Buy INR 910 INR 646

2 5-Nov-2015 Buy INR 704 INR 556

3 1-Jan-2016 Accumulate INR 704 INR 627

4 8-Feb-2016 Accumulate INR 623 INR 544

5 17-May-2016 Accumulate INR 590 INR 518

6 12-Aug-2016 Buy INR 751 INR 616

1

2

3

4

5

6

400

450

500

550

600

650

700

Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16

Not Covered Covered

47

INDRAPRASTHA GAS – TIME TO TANK UP


Indraprastha Gas

Key Financials



IGL IN Mcap: USD 1.4bn Buy

YE March

Revenue (INR mn)

YoY (%)

EBITDA (INR mn)

EBITDA margin (%)

Adj PAT (INR mn)

YoY (%)

Fully DEPS (INR)

ROE (%)

ROCE (%)

P/E (x)

EV/EBITDA (x)

FY15 36,810 (6.1) 7,930 21.5 4,377 21.5 31.3 20.9 18.0 21.6 11.4

FY16 36,858 0.1 7,717 20.9 4,162 (4.9) 29.7 17.2 15.3 22.7 11.7

FY17E 40,901 11.0 8,923 21.8 5,066 21.7 36.2 18.1 15.6 18.7 10.1

FY18E 43,742 6.9 9,753 22.3 5,784 14.2 41.3 17.8 14.8 16.4 9.2

Investment summary

Volume CAGR of 7-8% over FY16-18E: We expect CNG volume CAGR of 7-8% over FY15-18E, with a pickup in conversion to CNG among private cars, taxis and auto

rickshaws. Addition of buses would result in a ~10% rise in CNG volume growth. Also, with the addition of ~120,000 PNG domestic consumers annually over the next three

years and an arrest in decline of PNG industrial volume due to benign spot LNG prices, we expect overall volume growth of 7-8% over FY16-18E. Recently awarded Rewari

offers a peak potential of ~2mmscmd.

New applications to drive volume in medium term: The company is looking at new applications like CHPs, VAMs & two-wheelers. We estimate two-wheelers may

consume 0.5mmscmd of CNG. While it is difficult to gauge demand growth from these applications, we believe it will result in higher rerating of the stock.

Favorable economics: low domestic prices and rise in auto fuels have led to savings of up to 65% over liquid fuels. We expect EBITDA/scm to rise to INR 5.7-5.8 over

FY17-18E, with rise in demand and better pricing power in the industrial segment.

Robust free cashflow: With CGD infrastructure laid across most of Delhi, IGL’s high capex phase is over and will generate free cash flow of INR 15bn over FY16-18E.

Valuation

In line with global peers, we increase target multiple of IGL from 15x to 19x to accommodate for volume growth that would subsequently come from new applications and put

further emphasis on curbing pollution. We recommend Buy with a target price of INR 845 on 19x FY18E consolidated EPS of INR 45.7.

Key risks

Possible decline in price of alternate fuels resulting in poor pickup in industrial sales. North Delhi Municipal Corporation has demanded way leave facility charge.

49


IGL: CNG catches up

CNG volume CAGR of 7% CAGR over FY16-18E Quarterly volume growth

Source: Company, Elara Securities Estimate Source: Company, Elara Securities Research

Since December 2015, the Delhi government has twice implemented plying of vehicles with odd/even registration plates on alternate days for a period of 15 days. CNG

vehicles, however, were exempted from the ruling. This has resulted in higher conversion of private vehicles to CNG

CNG prices are down from INR 38.35/kg in July 2015 to INR 36.85/kg in July 2016 while gasoil prices increased 10% with a marginal decline in gasoline

prices. We expect the recent decline in oil prices to be short-lived. As oil prices rise, we would see further increase in liquid fuel prices. Comparatively, due to high

weightage of Henry Hub in the calculation of domestic gas price, we do not expect a sharp rise in CNG prices

NGT has put further restrictions on registration of gasoil vehicles in Delhi. This would further boost CNG sales. Supreme Court recently allowed aggregators to

run non-CNG vehicles until their permits expire. Most vehicles have a permit of 3-5 years. We expect this conversion to add 0.24mmscmd of demand.

Even without bus additions, management guides 7-8% volume growth. With bus additions, we may see a higher trajectory of ~10% growth in CNG

Opened 60 CNG stations post FY16 until now, taking the total number of CNG stations to 400. This may reduce queuing time, thereby increasing conversion

Green corridors of Delhi-Agra-Lucknow-Kanpur, Delhi-Jaipur, Delhi-Chandigarh & Delhi-Haridwar likely to boost volume further

The current CNG pilot for two-wheelers, if successful, would result in additional 0.5mmscmd of demand

-5%

0%

5%

10%

15%

20%

25%

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14

Q4FY14

Q1FY15

Q2FY15

Q3FY15

Q4FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

CNG volume growth

0

5

10

15

20

0

1

2

3

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E

(%) (mn kgs/day)

Volumes (LHS) Growth

50


IGL: growth drivers for PNG domestic


Domestic PNG

Strong push by the government to increase PNG penetration as one

of the means of reducing access to subsidized LPG

Strong domestic customer addition at ~75,000 in FY16, which is

expected to grow to ~120,000 annually over the next two years.

The company has commissioned a study to evaluate new uses of gas. To

date, there has not been any focus on gas geysers, CHPs. We believe focus

on such applications will increase.

40% rise over the past eight quarters


Domestic customer additions to pick up

14

16

18

20

22

24

Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16

(mmscm)

PNG-domestic consumption

0

30,000

60,000

90,000

120,000

150,000

0

200,000

400,000

600,000

800,000

1,000,000

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17E

FY18E

(nos) (nos)

Domestic customers (LHS) Addition (RHS)

51


IGL: growth drivers of PNG industrial

Source: Company, Elara Securities Research Source: Platts, Elara Securities Research

Industrial & commercial PNG

The drop in RLNG prices as a result of the successful renegotiation

of long-term Rasgas contract has helped in arresting PNG industrial &

commercial volume decline.

Noida administration had ordered all industrial units to shift to

natural gas by March 2016. The order is being challenged. However, we

believe focus on curbing pollution will result in higher pickup from industrial

consumers.

Spot RLNG vs fuel oil price Steady rise in commercial/industrial consumers

0

500

1,000

1,500

2,000

2,500

3,000

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

(nos)

PNG-commercial/industrial

34

36

38

40

42

44

46

Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16

(mmscm)

PNG-commercial/industrial sales


PNG-commercial/industrial consumption expected to rise

3

8

13

18

23

Jan-1

3

Mar-

13

May-1

3

Jul-13

Sep-1

3

Nov-1

3

Jan-1

4

Mar-

14

May-1

4

Jul-14

Sep-1

4

Nov-1

4

Jan-1

5

Mar-

15

May-1

5

Jul-15

Sep-1

5

Nov-1

5

Jan-1

6

Mar-

16

May-1

6

(USD/mmBtu)

Spot LNG Fuel Oil

Fuel oil becomes expensive to LNG

52


IGL: economics in favor of CNG vs alternate fuels


High conversion of private cars Autorickshaw numbers have already picked up

CNG volume growth can hit 10% under the right set of conditions

Even if addition of buses does

not take place in the near

term, CNG volume can still

comfortably grow at 7%

FY16 addition

Count Mileage

(km/kg) Running

(km) Consumption

(mmscmd)

as % of FY16 CNG

consumption

Bus (145) 1,500 4.1 150 0.06 1.5

Private cars 33,645 (pvt cars

+ taxis)

40,000 16.7 20 0.05 1.3

Taxis 10,000 20.0 150 0.08 2.0

Autos 17,715 20,000 25.0 150 0.13 3.3

0.31 8.1

Source: Company, Elara Securities Research Source: Company, Elara Securities Research

2.0

2.5

3.0

3.5

4.0

0

20,000

40,000

60,000

80,000

100,000

120,000

FY10 FY11 FY12 FY13 FY14 FY15 FY16

(INR/km) (nos)

Conversions (LHS) Savings (RHS)

Due to measures to curb pollution, conversion has increased to 3,000-4,000 per month in FY17YTD

1.0

1.2

1.4

1.6

1.8

2.0

0

10,000

20,000

30,000

40,000

FY10 FY11 FY12 FY13 FY14 FY15 FY16

(INR/km) (nos)

Conversions (LHS) Savings (RHS)

53


IGL: cashflow to improve


Cashflow generation of INR 5-6bn each year

Volume-led growth in EBITDA

PAT CAGR of ~18% during FY16-18E

Expect increase in EBITDA/scm

Source: Company, Elara Securities Estimate Source: Company, Elara Securities Estimate


5.00

5.25

5.50

5.75

6.00

3.50

3.75

4.00

4.25

4.50

4.75

FY13 FY14 FY15 FY16 FY17E FY18E

(INR) (mmscmd)

Volume EBITDA/scm (RHS)

The company has not passed on the full benefit of cost decline from Apr 1, 2016

3.50

3.75

4.00

4.25

4.50

4.75

5.00

6,000

7,000

8,000

9,000

10,000


(mmscmd) (INR mn)

Volume (RHS) EBITDA

Volume CAGR of ~7% & EBITDA CAGR of 12.4% during FY16-18E

(2,000)

0

2,000

4,000

6,000

8,000

10,000


(INR mn)

Capex Operational Cash Flow Change in borrowing

3,000

3,500

4,000

4,500

5,000

5,500

6,000


(10)

(5)

0

5

10

15

20

25 (INR mn)

PAT Growth (RHS)

54


IGL: valuation


Volume (mmscmd) 3.8 3.8 4.0 4.3 4.6

EBITDA/scm (INR) 5.7 5.7 5.3 5.7 5.8

Assumptions

Target P/E (x) 18.6

Standalone EPS (INR) 41.7

Contribution in EPS from CUGL & MNGL (INR) 4.1

Consolidated EPS (INR) 45.4

Target Price (INR) 845

Valuation (FY18E)

One-year forward P/E of IGL One-year forward P/BV of IGL


Source: Company, Bloomberg, Elara Securities Estimate Source: Company, Bloomberg, Elara Securities Estimate


1x

2x

3x

4x

5x

0

200

400

600

800

1,000

1,200

Jun-0

7

Dec-

07

Jun-0

8

Dec-

08

Jun-0

9

Dec-

09

Jun-1

0

Dec-

10

Jun-1

1

Dec-

11

Jun-1

2

Dec-

12

Jun-1

3

Dec-

13

Jun-1

4

Dec-

14

Jun-1

5

Dec-

15

Jun-1

6

(INR) Stock has traded above 2x P/BV for the past few years

6x

9x

12x

15x

18x

0

200

400

600

800

Jun-0

7

Dec-

07

Jun-0

8

Dec-

08

Jun-0

9

Dec-

09

Jun-1

0

Dec-

10

Jun-1

1

Dec-

11

Jun-1

2

Dec-

12

Jun-1

3

Dec-

13

Jun-1

4

Dec-

14

Jun-1

5

Dec-

15

Jun-1

6

(INR) Adverse ruling by PNGRB led to a

sharp fall in the stock price

Robust volume growth also results in higher multiple

55


IGL: key financials




EBITDA 7,930 7,717 8,923 9,753

Depreciation 1,487 1,577 1,747 1,847

EBIT 6,443 6,141 7,176 7,906

Interest cost 298 91 0 0

Other income 345 299 386 727

PBT 6,490 6,349 7,562 8,633

Less: taxation 2,113 2,187 2,495 2,849


PAT 4,377 4,162 5,066 5,784


Equity Capital 1,400 1,400 1,400 1,400

Reserves 19,581 22,732 26,652 31,126

Total Borrowings 1,453 0 0 0

Deferred Taxes 1,272 1,647 1,647 1,647

Others 3,712 4,165 4,885 5,605


Fixed assets 22,099 23,045 23,298 23,451

Investments 2,909 2,592 2,592 2,592

Current Assets 5,727 8,024 12,429 17,777


Net Working Capital 2,411 4,308 8,695 13,736

Total Assets 27,418 29,945 34,584 39,778


Operating Cash Flow 5,815 6,310 7,150 7,572

Capex (2,010) (2,523) (2,000) (2,000)

Free Cash Flow 3,805 3,787 5,150 5,572

Investing Cash Flow (3,400) (1,907) (1,614) (1,273)

Financing Cash Flow (2,958) (2,526) (983) (1,147)

Net Change in Cash (543) 1,877 4,553 5,152

Opening Cash 2,990 2,447 4,324 8,877

Closing Cash 2,447 4,324 8,877 14,029


Income statement ratios (%)

Revenue growth (6.1) 0.1 11.0 6.9

EBITDA growth 1.4 (2.7) 15.6 9.3

Adj PAT growth 21.5 (4.9) 21.7 14.2

EBITDAM 21.5 20.9 21.8 22.3

Adj net margin 11.9 11.3 12.4 13.2

Return & liquidity ratios

Interest Coverage Ratio (x) 21.6 67.9 NA NA

Net debt/Equity (x) (0.0) (0.2) (0.3) (0.4)

ROE (%) 20.9 17.2 18.1 17.8

ROCE (%) 18.0 15.3 15.6 14.8

Per share data & valuation ratios

Adj EPS (INR) 31.3 29.7 36.2 41.3

Adj EPS growth (%) 21.5 (4.9) 21.7 14.2

BVPS (INR) 150 172 200 232

DPS (INR) 6.0 6.0 7.0 8.0

P/E (x) 21.6 22.7 18.7 16.4

EV/EBITDA (x) 11.4 11.7 10.1 9.2

P/BV (x) 4.5 3.9 3.4 2.9

Dividend Yield (%) 0.9 0.9 1.0 1.2

56


Coverage History


1 06-May-2015 Buy INR 509 INR 400

2 30-Jun-2015 Buy INR 584 INR 418

3 3-Sep-2015 Buy INR 644 INR 468


5 12-Aug-2016 Buy INR 845 INR 676

1 2

3

4

5

250

350

450

550

650

750

May-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Feb-16 Apr-16 Jun-16 Aug-16

Not Covered Covered

57

MAHANAGAR GAS – NEW KID ON THE BLOCK


Mahanagar Gas

Investment summary

Large potential for CNG: In 2001, the High Court ordered phasing out of older transport vehicles unless converted to CNG. However, there is no mandatory use of CNG

for transportation. Currently, ~1,000 out of ~4,000 BEST buses are still running on gasoil. In Mumbai, adjoining areas and Raigad District, a total of 6.7mn vehicles exist out

of which, the company targets 1.8mn. The 0.47mn vehicles plying on the roads currently suggests a 26% penetration.

Large PNG consumer base: PNG-domestic has the potential of 3mn households, out of which only 0.86mn have been connected to date. PNG commercial has the

potential of 8,000-9,000, out of which only 2,800 have been connected.

Raigad offers large potential for industrial growth: MGL was awarded Raigad District for CGD development in 2015. Raigad has a large industrial base of chemicals,

pharmaceuticals, iron & steel, engineering products, plastics and food & agro products. The company plans to connect 6-7 industrial clusters in the upcoming months.

Highest EBITDA/scm: While we expect softening, EBITDA/scm of INR 5.8 in FY16 is the highest among listed entities.

Valuation

In line with global peers, we value MGL at 18.6x FY18E EPS of INR 35, with ~5-8% volume growth. With a target price of INR 652, we initiate coverage with a Buy rating.

Key risks

Downside risks include low oil prices, an increase in LNG prices resulting in poor industrial pickup.

Key Financials


MAHGL IN Mcap: USD 0.8bn Buy


YE March

Revenue (INR mn)

YoY (%)

EBITDA (INR mn)

EBITDA margin (%)

Adj PAT (INR mn)

YoY (%)

Fully DEPS (INR)

ROE (%)

ROCE (%)

P/E (x)

EV/EBITDA (x)

FY15 20,949 11.1 4,897 23.4 3,010 1.3 30.5 21.4 17.9 17.6 10.5

FY16 20,789 (0.8) 5,130 24.7 3,087 2.6 31.3 20.2 17.1 17.2 10.0

FY17E 22,409 7.8 5,130 22.9 3,133 1.5 31.7 18.8 15.6 16.9 10.0

FY18E 24,366 8.7 5,672 23.3 3,460 10.4 35.0 19.2 16.1 15.3 9.1

59


Operational areas

Operational areas


MGL operates in Mumbai and adjoining areas. It has been awarded the

Raigad District in 2015 where operations are yet to commence

It has a network of 188 CNG stations and plans to add a total of 83

CNG stations in the next five years, mostly in adjoining areas

Marketing exclusivity in Mumbai and adjoining areas expired in 2012 and

2014, respectively. However, the company has filed a writ petition in the

court, challenging the same

Network exclusivity is valid until 2020 for Mumbai, 2030 for

adjoining areas and until 2040 for Raigad

60


Sales & sourcing breakdown

Low dependence on term LNG (%)



In FY16, the company sourced 89% of sales from domestic sources and

only 5.8% was sourced from term contracts

Low dependence on term contracts would help take advantage of

low-priced LNG for the industrial segment

Domestic gas allocation

88.5

Spot LNG 5.7

Term LNG 5.8

CNG is the major segment (%)

High dependence of ~75% on CNG volume

The PNG industrial segment comprises ~14% of sales. As Raigad

becomes operational, we expect industrial volume to increase

CNG 74.21

PNG Industrial 14.42

PNG-Domestic 11.37

61


Greener times ahead

Expect volume growth of ~10% in PNG domestic to continue Expect volume growth of ~5-8% over FY16-18E


Volume CAGR of CNG stood at 7% during FY11-16. There is still a

large number of BEST buses (~1,000) remaining to be converted to CNG.

Growth of vehicles and continued conversion into CNG would continue to

drive CNG volume growth

Urbanization of the Raigad District would drive CNG volume

New CNG stations in adjoining areas would result in higher

conversion

Mumbai has 1.1mn two-wheelers. If the CNG pilot is successful, we

expect potential of 0.12mmscmd from two-wheelers alone at 20%

penetration

Large emphasis of government in increasing penetration of PNG domestic

Only 0.86mn out of a total population of 3.0mn households

connected to date, resulting in higher potential for growth

Source: Platts, Elara Securities Estimate

1.2

1.4

1.6

1.8

2.0

FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E

(mmscmd)

CNG

Volume CAGR of 7% during FY11-16

0.15

0.20

0.25

0.30

0.35


(mmscmd)

Domestic


62


Commercial & industrial segments

Poor volume growth in the industrial segment Commercial volume CAGR of 5% during FY16-18E


Due to high LNG price and poor industrial growth, we have not seen

growth in the industrial segment

Raigad District offers good industrial potential of ~0.3mmscmd.

The upcoming airport and related infrastructure would add to industrial

growth in the long term


0.10

0.12

0.14

0.16

0.18


(mmscmd)

Commercial


MGL has connected 2,800 commercial customers out of total

potential of 9,000-10,000

As penetration improves, we expect volume growth

0.14

0.16

0.18

0.20

0.22


(mmscmd)

Industrial


63


MGL: financials to show improvement

Strong free cashflow generation EBITDA CAGR of 5.2% over FY16-18E




PAT CAGR of 5.9% during FY16-18E

Although we have taken moderate volume growth resulting in moderate

EBITDA & PAT growth, it may be noted as Raigad District becomes

operational and more CNG stations are opened, we expect a sharp

increase in volume pickup. If regulatory push comes in, then volume

growth may be even higher at 8-10%

2,000

2,300

2,600

2,900

3,200

3,500


(INR mn)

5-8% volume growth over FY16-18E to result in 5.9% PAT CAGR

3,000

3,500

4,000

4,500

5,000

5,500

6,000


(INR mn)

5-8% volume growth over FY16-18E to result in 5% EBITDA CAGR

1,500

2,000

2,500

3,000

3,500

FY12 FY13 FY14 FY15 FY16 FY17E FY18E

(INR mn)

64


MGL: valuation

Source: Company, Elara Securities Estimate Source: Elara Securities Estimate

Target P/E (x) 18.6

EPS (INR) 35.0

Target price (INR) 652

Key assumptions Valuation (FY18E)


Volume (mmscmd) 2.3 2.4 2.4 2.6 2.8

EBITDA/scm (INR) 5.9 5.6 5.8 5.5 5.6

65


MGL: key financials



Net operating income (LHS) 20,949 20,789 22,409 24,366

EBITDA 4,897 5,130 5,130 5,672

Depreciation 799 841 948 1,023

EBIT 4,098 4,289 4,182 4,649

Other income 407 427 504 524

Interest cost 12 29 10 8

PBT 4,493 4,686 4,676 5,164

Less: taxation 1,483 1,600 1,543 1,704


PAT (LHS) 3,010 3,087 3,133 3,460

Balance Stee (INR mn) FY15 FY16 FY17E FY18E

Equity Capital 893 893 988 988

Reserves 13,181 14,386 15,640 17,024

Total Borrowings 156 44 116 96

Deferred Taxes 1,027 1,181 1,181 1,181

Others 3,227 3,898 3,903 4,378


Fixed Assets 14,436 15,885 16,819 17,295

Investments 3,715 3,882 3,882 3,882

Current Assets 3,505 3,796 4,252 5,907


Net Working Capital 334 636 1,127 2,489

Total assets 18,485 20,402 21,828 23,667


Operating Cash Flow 4,550 4,722 3,812 5,128

Capex (1,866) (2,289) (1,882) (1,500)

Free Cash Flow 2,684 2,433 1,930 3,628

Investing Cash Flow (2,160) (2,456) (1,882) (1,500)

Financing Cash Flow (1,829) (1,994) (1,713) (2,096)

Net Change in Cash 561 272 217 1,532

Opening Cash 888 1,449 1,721 1,937

Closing Cash 1,449 1,721 1,937 3,470


Income Statement Ratios (%)

Revenue growth 11.1 (0.8) 7.8 8.7

EBITDA growth 0.3 4.7 0.0 10.6

Adj PAT growth 1.3 2.6 1.5 10.4

EBITDAM 23.4 24.7 22.9 23.3

Adj net margin 14.4 14.8 14.0 14.2

Return & Liquidity Ratios

Int/PBIT 340.1 145.6 415.3 548.9

Net debt/Equity (x) (0.4) (0.4) (0.3) (0.4)

ROE (%) 21.4 20.2 18.8 19.2

ROCE (%) 17.9 17.1 15.6 16.1

Per Share Data & Valuation Ratios

Diluted Adj EPS (INR) 30.5 31.3 31.7 35.0

Adj EPS growth (%) 1.3 2.6 1.5 10.4

Book Value (INR) 142 155 168 182

DPS (INR) 15.8 15.8 15.9 17.5

P/E (x) 17.6 17.2 16.9 15.3

EV/EBITDA (x) 10.5 10.0 10.0 9.1

Price/Book (x) 3.8 3.5 3.2 2.9

Dividend yield (%) 2.9 2.9 3.0 3.3

66


Coverage History


1 12-Aug-2016 Buy INR 652 INR 537

1

400

450

500

550

600

30-J

un-1

6

3-J

ul-16

6-J

ul-16

9-J

ul-16

12-J

ul-16

15-J

ul-16

18-J

ul-16

21-J

ul-16

24-J

ul-16

27-J

ul-16

30-J

ul-16

2-A

ug-1

6

5-A

ug-1

6

8-A

ug-1

6

11-A

ug-1

6

Not Covered Covered

67

PETRONET LNG – SET TO TAKE-OFF


Petronet LNG

Investment summary

Successful renegotiation of long-term Rasgas contract: Higher price of long-term contracts had resulted in quarterly volume declining from average of 94tbtu to

57tbtu in CY15, with a sharply low 38tbtu in Q3FY16. However, a successful renegotiation resulted in alignment with spot prices resulting in 109tbtu in Q4FY16. We expect

continued a higher pickup of long-term volume.

Capacity-led volume growth: Petronet LNG is expanding capacity at Dahej from 10mn tonne pa to 15mn tonne pa at a capex of INR 24bn. Expansion is expected to be

commissioned by December 2016E. Post expansion, 14.75mn tonnes pa out of 15.00mn tonnes pa is already booked with offtakers. Dahej terminal is expected to expand

to 17.5mn tonne pa by FY20E.

Kochi terminal utilization: Despite a favourable SC order on laying of pipeline, it has not happened due to objection from land owners. We expect current utilization of

8% to double in FY18E due to expansion of BPCL’s Kochi refinery.

Improved financials: EBITDA to jump by ~70% during FY16-18E.

Valuation

We recommend Buy with a TP of INR 386 on a DCF method (at a WACC at 12% and a terminal growth rate at 3%).

Key risks

Downside risks include delay in project execution, poor capital allocation and lower utilization of the terminals.

Key Financials



PLNG IN Mcap: USD 3.5bn Buy

YE March

Revenue (INR mn)

YoY (%)

EBITDA (INR mn)

EBITDA margin (%)

Adj PAT (INR mn)

YoY (%)

Fully DEPS (INR)

ROE (%)

ROCE (%)

P/E (x)

EV/EBITDA (x)

FY15 395,010 4.6 14,390 3.6 8,825 24.0 11.8 14.6 12.6 26.7 16.3

FY16 271,334 (31.3) 15,903 5.9 9,140 3.6 12.2 13.4 11.7 25.8 14.7

FY17E 247,817 (8.7) 18,157 7.3 12,063 32.0 16.1 15.2 12.2 19.5 12.9

FY18E 469,293 89.4 27,553 5.9 19,351 60.4 25.8 16.6 17.9 12.2 8.5

69


PLNG: expansion at the right time

Volume is likely to surge 80% during FY16-20E


Dahej to expand to 17.5mn tonne pa by FY20E

Dahej to see low-cost expansion to 15mn tonne pa at a cost of

INR 23bn by December 2016E and to 17.5mn tonne pa at a cost

of INR 12bn by FY20E

For expansion to 15mn tonne pa, 14.75mn tonne pa is already booked

with offtakers

There are further plans to set up two international LNG terminals

Kochi is underutilized at 6-8% on non-completion of an evacuation

pipeline

Only two new LNG terminals: Apart from Dahej expansion, only two

LNG terminals coming up are GSPC’s 5mn-tonne-pa Mundra LNG terminal

(H2CY17) and Indian Oil’s 5mn-tonne-pa Ennore LNG terminal (2018)

Demand to double in next 3-4 years: Structurally low LNG prices

would help boost demand from fertilizer companies and other industries;

development of gas grid would further open up new markets for LNG

0

5

10

15

20

25

FY15 FY16 FY17E FY18E FY19E FY20E

(mn tonne pa)

Kochi Dahej

Expansion to 15mn tonne pa by Q3FY17, we assume Q1FY18 on

a conservative note

Further expansion to 17.5mn tonne pa

5

10

15

20

25

FY15 FY16 FY17E FY18E FY19E FY20E

(mn tonne pa)

Total vol handled

Capacity expansion ahead of peers, helping in higher offtake

70


PLNG: low LNG prices help

Source: Capitaline, Elara Securities Research

High-priced Rasgas volume finds few takers


Return of high utilization



30

60

90

120

1Q

FY12

2Q

FY12

3Q

FY12

4Q

FY12

1Q

FY13

2Q

FY13

3Q

FY13

4Q

FY13

1Q

FY14

2Q

FY14

3Q

FY14

4Q

FY14

1Q

FY15

2Q

FY15

3Q

FY15

4Q

FY15

1Q

FY16

2Q

FY16

3Q

FY16

4Q

FY16

(Tbtu)

Sales of long term Rasgas volumes

Inability of offtakers to place high-priced Rasgas volume

Successful renegotiation results in lowering of LNG prices and high offtake

60%

80%

100%

120%

140%

1Q

FY12

2Q

FY12

3Q

FY12

4Q

FY12

1Q

FY13

2Q

FY13

3Q

FY13

4Q

FY13

1Q

FY14

2Q

FY14

3Q

FY14

4Q

FY14

1Q

FY15

2Q

FY15

3Q

FY15

4Q

FY15

1Q

FY16

2Q

FY16

3Q

FY16

4Q

FY16

Dahej utilization

High cost of long-term Rasgas contract resulted in decline in utilization

Successful renegotiation of 7.5mn tonne pa, long-term contract

with Rasgas resulted in better alignment with spot prices. This

resulted in pickup of long-term volume from Q4FY16.

After power, fertilizer next big consumer: Government-initiated

auction of power plants and pooling of gas for fertilizer plants have

resulted in rise in gas consumption. Additional ~8mmscmd of demand

has come from the power sector. The fertilizer sector has

increased consumption from 41.6mmscmd in FY15 to

44.1mmscmd in FY16

Post the expansion of Dahej to 15mn tonne pa, 14.75mn tonne pa is

booked with offtakers. This would provide higher visibility of earnings

for the company.

Gujarat Gas wins five new geographical areas recently. These have

higher potential of giving a boost to industrial demand.

71


PLNG: Kochi rise in uptake from 2016-end without pipeline

Kochi refinery expansion would add to volume Kochi Phase-II pipeline to commence construction soon

Source: Company, Elara Securities Research Source: Company, Elara Securities Research

Kochi refinery is currently taking ~0.6mmscmd from Kochi

Once expansion of Kochi refinery is complete by May 2016,

it would offtake ~3.0mmscmd from the Kochi terminal

Even without completion of Phase-II pipeline, utilization would

rise to ~20% in FY18E

While recent news reports (Source: The Hindu) suggest the Kochi-

Mangalore leg of the pipeline would be completed soon, we

assume a 50% utilization of Kochi in FY19E and 90%

utilization from FY20E; completion of Phase-II pipeline by

GAIL would result in higher utilization

0%

2%

4%

6%

8%

10%

1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16

Kochi utilization

Low utilization on non-completion of pipelines; increase to ~20% with expansion of Kochi refinery

by December 2016

72


PLNG: EBITDA to jump by ~60% during FY15-18E

EBITDA to jump by ~70% during FY16-18E EPS to almost double during FY16-18E


Improvement in return ratios


The Dahej terminal is running at 114% utilization. We assume 105%

utilization expansion to 15.0mn tonne pa and 100% post-expansion

to 17.5mn tonne pa. Higher demand may result in higher utilization and

earnings

The company may do more spot-term volume and command higher

marketing margin as demand of LNG picks up

Additional triggers

400

500

600

700

800

900

0

5,000

10,000

15,000

20,000

25,000

30,000


(mmBtu) (INR mn)

Total vol EBITDA

Dahej expansion from 10mmtpa to 15mmtpa

8

13

18

23

28


ROE (%) ROCE (%)

High marketing margins on spot/short-term cargo

(60)

(40)

(20)

0

20

40

60

80

8

13

18

23

28


Diluted EPS (INR) Adj EPS Growth (%)

High marketing margin on spot/short-term cargo

73


PLNG: assumptions & valuation

Assumptions for volume growth


Valuation: DCF-based target price of INR 386

(tbtu) FY14 FY15 FY16 FY17E FY18E FY19E FY20E

Total Regas sales volume 440 422 367 440 832 949 1,053

-Dahej

Long-term sales 374 344 277 390 767 767 767

Short-term/spot 62 72 75 46 13 52 52

-Kochi 3 5 15 4 52 130 234

Regas 54 105 213 117 0 0 0

(INR mn) FY17E FY18E FY19E FY20E FY21E FY22E

PAT including div/FBT 12,063 19,351 25,163 28,222 34,358 36,945

Depreciation 3,527 3,979 5,760 5,885 6,010 6,135

Change in net working capital (2,946) 522 699 269 590 553

Capex (10,000) (5,000) (5,000) (5,000) (5,000) (5,000)

FCFF (INR mn) 2,643 18,851 26,622 29,376 35,957 38,633

NPV (INR mn) 106,380

Terminal growth rate (%) 0.0%

TV 182,679

Enterprise value 289,059

Net debt (475)

Equity value 289,534

Target price (INR) 386


74


PLNG: key financials




EBITDA 14,390 15,903 18,157 27,553

Depreciation 3,154 3,216 3,527 3,979

EBIT 11,236 12,687 14,630 23,574

Interest Cost 2,935 2,388 1,596 1,435

Other Income 1,548 1,704 2,838 3,322

PBT 9,849 12,004 15,872 25,462

Less: Taxation 1,024 2,864 3,809 6,111

Effective Tax Rate (%) 10.4 23.9 24.0 24.0

PAT 8,825 9,140 12,063 19,351


Equity Capital 7,500 7,500 7,500 7,500

Reserves 49,386 56,264 64,940 78,857

Borrowings 23,738 20,610 25,000 16,000

Deferred taxes 7,270 8,710 8,710 8,710

Long term liability 9,000 14,000 14,000 14,000


Fixed Assets 76,895 83,610 90,083 91,105

Investments 900 900 900 900

Inventories 8,826 2,461 6,292 12,102

Debtors 13,428 9,885 10,863 20,572

Cash 3,641 21,829 25,475 29,893

Loans & Advances 7,493 5,762 5,231 5,436

Other Current Assets 4 33 4 4

Net Current Assets 19,100 22,574 29,167 33,063

Total Assets 96,894 107,084 120,150 125,067


Operating cash flow 6,440 33,510 12,643 23,851

Capex (8,599) (9,931) (10,000) (5,000)

Free cash flow to firm (2,159) 23,578 2,643 18,851

Investing cash flow (8,100) (9,931) (10,000) (5,000)

Financing cash flow (7,027) (5,390) 1,003 (14,433)

Net change in cash (8,686) 18,188 3,646 4,418

Opening cash 12,327 3,641 21,829 25,475

Closing cash 3,641 21,829 25,475 29,893


Income Statement Ratios (%)

Revenue Growth 4.6 (31.3) (8.7) 89.4

EBITDA Growth (4.0) 10.5 14.2 51.8

PAT Growth 24.0 3.6 32.0 60.4

EBITDAM 3.6 5.9 7.3 5.9

Net Margin 2.2 3.4 4.9 4.1

Return & Liquity Ratios

Int/PBIT 0.3 0.2 0.1 0.1

Net Debt/Equity 0.4 (0.0) (0.0) (0.2)

ROE (%) 14.6 13.4 15.2 16.6

ROCE (%) 12.6 11.7 12.2 17.9

Per Share Data & Valuation Ratios

Diluted EPS (INR) 11.8 12.2 16.1 25.8

Adj EPS Growth (%) 24.0 3.6 32.0 60.4

Book Value (INR/share) 75.8 85.0 96.6 115.1

DPS (INR) 2.0 2.5 3.9 6.2

P/E (x) 26.7 25.8 19.5 12.2

EV/EBITDA (x) 16.3 14.7 12.9 8.5

Price/Book (x) 4.1 3.7 3.3 2.7

Dividend Yield (%) 0.6 0.8 1.2 2.0

75


Coverage History


1 31-Jan-2014 Buy INR 137 INR 110

2 31-Mar-2014 Reduce INR 137 INR 137

3 30-Apr-2014 Sell INR 131 INR 145

4 4-Aug-2014 Sell INR 139 INR 180

5 07-Nov-2014 Sell INR 136 INR 201

6 05-Feb-2015 Sell INR 155 INR 184

7 24-Mar-2015 Buy INR 241 INR 176


8 24-Apr-2015 Buy INR 229 INR 167

9 30-Jul-2015 Buy INR 242 INR 194

10 19-Oct-2015 Buy INR 245 INR 191

11 1-Jan-2016 Buy INR 315 INR 259

12 10-Feb-2016 Buy INR 312 INR 251


14 12-Aug-2016 Buy INR 386 INR 314

1

2 3

4 5

6 7

8

9 10

11 12

13

14

100

150

200

250

300

350

Jan-1

2

Feb-1

2

Apr-

12

Jun-1

2

Aug-1

2

Oct

-12

Dec-

12

Feb-1

3

Apr-

13

Jun-1

3

Aug-1

3

Oct

-13

Nov-1

3

Jan-1

4

Mar-

14

May-1

4

Jul-14

Sep-1

4

Nov-1

4

Jan-1

5

Mar-

15

May-1

5

Jul-15

Aug-1

5

Oct

-15

Dec-

15

Feb-1

6

Apr-

16

Jun-1

6

Aug-1

6

Not Covered Covered

76

APPENDIX


Delhi-Jaipur green corridor (2 of 8)

22km

128km

128km Companies

Traffic (ADT)


Delhi: IGL Jaipur: Round 7

61,871 0.5


78


Delhi-Chandigarh green corridor (3 of 8)



Delhi: IGL Chandigarh: IOCL-Adani

46,533 0.4


79


Delhi-Haridwar green corridor (4 of 8)

83km

140km



Delhi: IGL Haridwar: GAIL/BPCL

16,540 0.1


80


Karanpur-Moradabad-Kashipur-Rudrapur green corridor (5 of 8)

Companies Traffic (ADT) Estimated vol (mmscmd)

GAIL 20,708 0.1


81


Allahabad-Kanpur-Varanasi green corridor (6 of 8)

203km

120km



Allahabad: IOCL-Adani, Kanpur: CUGL Varanasi: Not allocated

15,133 0.1


82


Vishakapatnam-Vijayawada green corridor (7 of 8)

150km 150km

Kovvur



Vizag: not authorized so far Kovvur: BGL Vijaywada: BGL

28,496 0.3


83


Bangalore-Mumbai-Pune green corridor (8 of 8)

148km 342km

90km

171km 195km

71km



Mumbai: MGL Pune: MNGL Bengaluru: GAIL Gas

27,912 0.9


84


Notes

85


The Note is based on our estimates and is being provided to you (herein referred to as the “Recipient”) only for information purposes. The sole purpose of this Note is to provide preliminary information on the business activities of the company and the projected financial statements in order to assist the recipient in understanding / evaluating the Proposal. Nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred to in this document. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved) and should consult its own advisors to determine the merits and risks of such an investment. 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Disclosures & Confidentiality for non U.S. Investors

86


India

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Europe

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London NW1 5JX,

United Kingdom

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USA

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Disclaimer for U.S. Investors

Research Analyst or his/her relative(s) has not served as an officer, director or employee of the subject company. Research analyst or Elara Securities (India) Private Limited have not received any compensation from the subject company in the past twelve months. Associate entities of Elara Securities (India) Private Limited may have received compensation from the subject company in the past twelve months. Research analyst or Elara Securities (India) Private Limited or its associate entities have not managed or co-managed public offering of securities for the subject company in the past twelve months. Research analyst or Elara Securities (India) Private Limited or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months. Research analyst or Elara Securities (India) Private Limited or its associate entities may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company or third party in connection with the Research Report in the past twelve months.

Disclosures for U.S. Investors The research analyst did not receive compensation from Gujarat Gas Limited, Indraprastha Gas Limited, Mahanagar Gas Limited and Petronet LNG Limited. Elara Capital Inc.’s affiliate did not manage an offering for Gujarat Gas Limited, Indraprastha Gas Limited, Mahanagar Gas Limited and Petronet LNG Limited. Elara Capital Inc.’s affiliate did not receive compensation from Gujarat Gas Limited, Indraprastha Gas Limited, Mahanagar Gas Limited and Petronet LNG Limited in the last 12 months. Elara Capital Inc.’s affiliate does not expect to receive compensation from Gujarat Gas Limited, Indraprastha Gas Limited, Mahanagar Gas Limited and Petronet LNG Limited in the next 3 months.

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Team Details

Harendra Kumar Managing Director [email protected] +91 22 6164 8571

Sales Deepak Sawhney India [email protected] +91 22 6164 8549

Nishit Master India [email protected] +91 22 6164 8521 Prashin Lalvani India [email protected] +91 22 6164 8544

Sushil Bhojwani India [email protected] +91 22 6164 8512

Sudhanshu Rajpal India [email protected] +91 22 6164 8508 Parin Vora North America [email protected] +91 22 6164 8558

Sales Trading & Dealing

Manan Joshi India [email protected] +91 22 6164 8555 Manoj Murarka India [email protected] +91 22 6164 8551

Sanjay Joshi India [email protected] +91 22 6164 8554

Vishal Thakkar India [email protected] +91 22 6164 8552

Research

Abhishek Karande Analyst Technical & Alternate Strategy [email protected] +91 22 6164 8562

Adhidev Chattopadhyay Analyst Infrastructure, Real Estate [email protected] +91 22 6164 8526

Ashish Kejriwal Analyst Metals & Mining, Railways [email protected] +91 22 6164 8505

Ashish Kumar Economist [email protected] +91 22 6164 8536

Deepak Agrawala Analyst Power, Capital Goods [email protected] +91 22 6164 8523

Jay Kale, CFA Analyst Auto & Auto Ancillaries [email protected] +91 22 6164 8507

Rakesh Kumar Analyst Banking & Financials [email protected] +91 22 6164 8559

Ravi Menon Analyst IT Services [email protected] +91 22 6164 8502

Ravi Sodah Analyst Cement [email protected] +91 22 6164 8517

Sumant Kumar Analyst Agri, Travel & Hospitality, Paper [email protected] +91 22 6164 8503

Swarnendu Bhushan Analyst Oil and gas [email protected] +91 22 6164 8504

Harshit Kapadia Sr. Associate Power, Capital Goods [email protected] +91 22 6164 8542

Manuj Oberoi Sr. Associate Banking & Financials [email protected] +91 22 6164 8535

Anuja Barve Associate Agri, Travel & Hospitality, Paper [email protected] +91 22 6164 8541

Harsh Jhanwar Associate Cement [email protected] +91 22 6164 8546

Kamlesh Shirbhate Associate Infrastructure, Real Estate [email protected] +91 22 6164 8525

Milan Desai Associate Media [email protected] +91 22 6164 8516

Vijay Gyanchandani Associate Auto & Auto Ancillaries [email protected] +91 22 6164 8511

Vaishnavi Mandhaniya Executive Research Telecom [email protected] +91 22 6164 8519

Priyanka Sheth Editor [email protected] +91 22 6164 8568

Gurunath Parab Production [email protected] +91 22 6164 8515

Jinesh Bhansali Production [email protected] +91 22 6164 8537

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