Accumulate GIPCL; target of Rs 91: Emkay

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Accumulate GIPCL; target of Rs 91: Emkay

Emkay Global Financial Services is bullish on Gujarat Industries Power Co (GIPCL) and has recommended accumulate rating on the stock with a target of Rs 91 in its February 08, 2012 research report.

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Emkay Global Financial Services is bullish on Gujarat Industries Power Co (GIPCL) and has recommended accumulate rating on the stock with a target of Rs 91 in its February 08, 2012 research report.

"GIPCL's 3Q12 APAT stood at Rs168mn, up by 9% yoy (3Q11 APAT at Rs154mn after adjusting for Rs90mn of tax refund). The APAT was below our estimate of Rs413mn largely due to lower PAF of ~62% at Surat-II (250MW, 27% of 3Q12 generation) which resulted into under recoveries. The availability was good across other plants during the qtr: Vadodara I - 96%, Vadodara II - 95%, Surat I - 84%. Net revenues grew by 26% yoy to Rs3.9bn whereas the net generation remained flat yoy at 1.2BU. Net realization has increased by 26% (Rs3.3 vs Rs2.6) primarily on account of increase in fuel cost (up 34% yoy, Rs2.1/unit). We have trimmed our FY12E forecast by 13% to factor in 3Q12 performance. However, we highlight that our 4QFY12E and FY13E earnings remain unchanged. EPS for FY12E/FY13E stands at Rs8.6/10.7 respectively."

"We expect FY13E dividend yield to be around 5% vs. 3% historical average (based on average dividend payout of ~35% in past four years). Moreover the management has highlighted that technical issues at Surat-II has been resolved. However, given the continued issues with its project, we reduce our target P/B multiple from 1.1x to 0.9x. At CMP of Rs73/share, the stock is trading at 6.8xFY13E earnings and 0.7x FY13E Book Value - which we believe is attractive considering the core ROE of 16-17%. We maintain our Buy recommendation with a revised TP of Rs 91/share," says Emkay Global Financial Services research report.      

Public holding more than 90% in Indian cos

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