Buy GSPL; target Rs 117: Angel Broking

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Buy GSPL; target Rs 117: Angel Broking

Angel Broking is bullish on Gujarat State Petronet (GSPL) and has recommended buy rating on the stock with a target price of Rs 117 in its November 15, 2011 research report.

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Angel Broking is bullish on Gujarat State Petronet (GSPL) and has recommended buy rating on the stock with a target price of Rs 117 in its November 15, 2011 research report.

"Gujarat State Petronet (GSPL) reported robust set of numbers for 2QFY2012. The company's top line grew by 11.0% yoy and its bottom line grew by 40.7% yoy due to lower depreciation cost and higher other income during the quarter. During the quarter, total operating revenue increased by 11.0% yoy to Rs 281cr, mainly due to higher realization. Transmission tariff grew by 7.7% yoy to Rs 0.83/scm during 2QFY2012, mainly due to higher spot volumes. Transmission volumes decreased by 0.3% yoy to 35.2 mmscmd during the quarter. GSPL's EBITDA for the quarter grew by 11.3% yoy to Rs 258cr. During the quarter, depreciation cost declined by 42.1% to Rs 44cr due to lower depreciation rate. Interest expenses grew 39.4% yoy to Rs 34cr and other income grew by 64.8% yoy to Rs 14cr. Hence, the company's PAT grew by 40.7% yoy to Rs 129cr."

"We believe GSPL is a leveraged play on increasing gas demand in Gujarat (the country's hydrocarbon capital) from gas-based power plants and rising spot prices. We believe there is a limited downside risk on the tariff front. Further, successful winning of three interstate pipelines provides revenue visibility over the medium term. We value GSPL's stock at 6.5x FY2013E EBITDA, which provides a target price of Rs 117. Hence, we recommend a Buy rating on the stock," says Angel Broking research report.

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