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Buy Gujarat Industries Power; target of Rs 98: BP Equities
BP Equities is bullish on Gujarat Industries Power and has recommended buy rating on the stock with a target of Rs 98 in its August 16, 2011 research report.
BP Equities is bullish on Gujarat Industries Power and has recommended buy rating on the stock with a target of Rs 98 in its August 16, 2011 research report.
"Gujarat Industries Power Company Limited (GIPCL), topline stood at Rs 3,428 mn up 35.7% yoy and 10.8% sequentially, primarily due to commissioning of new lignite based plant at Surat of 125x2 MW. EBIDTA margins improved significantly by 1,246 bps yoy and was flat sequentially and stood at 37.8%, primarily due to reduction in total expenditure as a percentage of sales. Pat margins declined by 401 bps yoy and 1,364 bps sequentially and stood at 12.6%, primarily due to rise in cost of borrowing and depreciation due to new lignite plant which got commissioned. Effective tax rate stood at 23.4% high due to higher provisioning of tax while in case of previous periods it was income tax refunds."
"Company's recently commissioned Surat Lignite power plant II has stabilised in Q1FY12. We expect volumes to improve from the current quarter on the back of improving PLF going forward. At the current price of Rs. 81.40 the stock is trading at P/E 7.6x and P/B 0.9x. We recommend Buy with target price of Rs. 98 per share," says BP Equities research report.
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