Anagram Research has recommended a buy rating on Gujarat State Petronet in its June 28, 2008 research report. "At CMP of Rs 56, the stock is trading at 15x its FY10E EPS of Rs 3.8 and 12x its FY11E EPS of Rs 4.5, and EV/EBIDTA of 7x in 2010 and 5x in 2011. According to the draft proposal, the regulator (PGNRB) proposed ROCE post tax is fixed at 12%. GSPL’s current ROCE is way below 10%, which gives room for the company to increase the tariff in short- to medium-term to achieve allowed rate of return."
"The regulator has also proposed not to allow laying of another parallel pipeline. This protects the home turf of GSPL, where it has already created the infrastructure in the state, which has the largest consumption of gas. It can very advantageously move into neighbouring states of Rajasthan and Madhya Pradesh, leveraging it's existing pipeline in Gujarat as a feeder. Going forward City Gas Distribution (CGD) business can also be a big business for the company in the future. We have “BUY” rating on the stock," says Anagram's research report.
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