Sui Northern Gas Pipeline Limited (SNGPL) has announced its 4qfy24 results, reporting earnings per share (EPS) of Rs 13.01. This represents a significant 280% year-over-year and 123% quarter-over-quarter increase. The substantial increase in revenues is primarily attributed to the higher rate of return allowed to SNGPL, which was 26.22% for the full year of FY24, up from the previously determined rate of 20.64%.

Key Highlights:

– EPS Growth: Rs13.01 EPS in 4QFY24, up 280% YoY and 123% QoQ
– Rate of Return: 26.22% allowed for FY24, compared to 20.64% previously
– Disparity Compensation: Higher return in FY24 compensates for disparity in FY23 returns, where SSGC received 23.45% while SNGPL received 16.60%
– Distribution UFG: 7.74% reported vs. allowed benchmark of 7.21%, resulting in disallowance of ~Rs2bn
– Tax Rate: Effective tax rate of 36% in FY24, up from 33% in FY23
– Dividend: Rs7.5/share declared for FY24, compared to Rs4.5/share for FY23
– Trading Multiple: Company is trading at FY25 and FY26 PE of 4.6x and 5.2x, respectively

Earnings Estimates:

– FY25 Estimate: Based on a return of 25.92%
– FY26 Estimate: Based on a return of 23.3%

The significant jump in earnings in 4QFY24 seems inflated due to the higher allowed return for the full year. SNGPL’s stock is currently trading at a price-to-earnings (P/E) ratio of 6.08, based on trailing twelve-month (TTM) data. The company’s stock price has increased by 85.38% over the past year and 10.33% year-to-date.

Courtesy – Topline Research