Moneycontrol
Apr 20, 2017 05:36 PM IST | Source: Moneycontrol.com

Sell Gujarat Gas; target of Rs 735: Motilal Oswal

Motilal Oswal is bearish on Gujarat Gas has recommended sell rating on the stock with a target price of Rs 735 in its research report dated April 19, 2017.

Sell Gujarat Gas; target of Rs 735: Motilal Oswal

Motilal Oswal's research report on Gujarat Gas


The industrial segment constitutes 68% of GUJGA’s total sales volume. Gas competes with fuel oil, coal/petcoke and other dirty fuels like rice husk and brickets. In the absence of regulatory push, consumers are driven only by economics and switch pretty quickly from one fuel to another.


Outlook


Global gas utility companies are trading at 17.0x CY18/FY19 EPS. Due to higher volatility, we value the company at 15x, a 10% discount to global peers. At 15x FY19E EPS of INR 49.0, we value GUJGA at INR 735. Sell.


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