GSPL can touch Rs 113-115: Choksey

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See previous views by Deven Choksey See what other Experts & Brokerages are saying about Guj State Petro See messages about Guj State Petro Guj State Petro BSE | NSE 10/02/12 Are Mutual Funds betting on Guj State Petro?

Gujarat State Petronet (GSPL) can touch Rs 113-115, says Deven Choksey , KR Choksey Securities.

Choksey told CNBC-TV18, "The target would be a little lower comparatively because GSPL has already run up. We expect the price to go upto around Rs 113-115 levels by March working. But I think most important thing for this particular company is that they are a very dominal player as far as gas networking business is concerned - particularly state of Gujarat and they are already reaching now to 25 districts by expanding the pipeline kilometers from 1,400 to about 2,200 now. The capacity to carry is also being enhanced with the KG-D6 getting started. So from that perspective, the higher amount of utilization is taking place, which will ultimately be contributing to higher EBITDA."

He further added, "It is a typical company where huge amount of EBITDA is being seen out here. The depreciation policy for the company is little conservative that is why one is seeing a little muted bottomline because they depreciate the pipeline in twelve years as against thirty years conventional norms. But if you look at these companies, it is available this year they are likely to do a kind of cash earning of around 9 which is available at around 10 times multiples on that cash earning because I am not taking depreciated book value at this point of time because they are conservative. I think this company is also looking quite exciting because around 44% kind of a revenue growth can be seen in next two years time from this company on a CAGR basis."

Disclosure: It is safe to assume that we have got the investment position in the above company in personal capacity. Many of our clients are also having positions in this company. We have research coverage as well on the company.