Accumulate Guj Ind Power; target of Rs 94: Angel Broking

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Accumulate Guj Ind Power; target of Rs 94: Angel Broking

Angel Broking is bullish on Gujarat Industries Power (GIPCL) and has recommended accumulate rating on the stock with a target of Rs 94 in its May 26, 2011 research report.

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Angel Broking is bullish on Gujarat Industries Power (GIPCL) and has recommended accumulate rating on the stock with a target of Rs 94 in its May 26, 2011 research report.

"For 4QFY2011, Gujarat Industries Power (GIPCL) posted 124.9% yoy growth in net profit to Rs81.2cr due to a substantial reduction in fuel costs and write-back of taxes relating to previous years. During the quarter, the company's 165MW Vadodara Station II was shut down for maintenance, which led to low PLF of 30.8% (as against 80.8% in 4QFY2010), resulting in low fuel costs. However, Vadodara Station II achieved the requisite PAF for FY2011 as a whole and, hence, the company's top line was not impacted majorly in 4QFY2011. Consequently, OPM surged to 39%. The company indicated that operations of the newly commissioned SLPP Units 3 and 4 (250MW) have stabilised and are currently operating at healthy PAFs of ~80%."

"GIPCL's 4QFY2011 top line rose by 24.1% yoy to Rs315cr, aided by the commissioning of SLPP units 3 and 4. However, power generated during the quarter was lower by 29.8% due to lower PLFs reported by all of the company's plants on a yoy basis. OPM for the quarter rose by 1,457bp yoy and 1,236bp qoq to 39% due to lower fuel costs at 49% of net sales. Net profit rose by 124.9% yoy to Rs81.2cr on account of a surge in operating profit and net tax gains of Rs21.4cr for the quarter due to tax adjustments of earlier years and deferred tax income."

"We expect GIPCL's top line and bottom line to log CAGRs of 21.9% and 20.0% over FY2011-13, respectively. At the CMP of Rs85, the stock is trading at 0.8x FY2013 P/BV. We have assigned a P/BV of 0.9x on FY2013 book value to arrive at a target price of Rs94. We recommend Accumulate on the stock," says Angel Broking research report. 

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