Keep GSPL in portfolio, says SP Tulsian

17416 Investors following Guj State Petro. Share this News with them.

0

Like this story, share it with millions of investors on M3

Keep GSPL in portfolio, says SP Tulsian

One can keep Gujarat State Petronet (GSPL) in portfolio with a view of about two to three years, says SP Tulsian, sptulsian.com.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by SP Tulsian See what other Experts & Brokerages are saying about Guj State Petro See messages about Guj State Petro

One can keep Gujarat State Petronet (GSPL) in portfolio with a view of about two to three years, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Gujarat State Petronet (GSPL) falls in the category of other stocks which have seen a run-up of about 30%. The stock corrected and made a low of about Rs 73-74 last month and now it has started gradually going up and is ruling at about Rs 86."

He further added, "They are gas carriers having strong presence in Gujarat. Of the total gas pipeline in the country of about 10,000 kilometers, the company has close to about 2,160 kilometer of the gas pipeline in their fold. Apart from that, the company is putting on three routes for about 4,000 kilometers of gas pipeline."

"The financial performance of the company has been quite stagnant. For the first six months they posted an EPS of about Rs 4.75 against Rs 9 of FY11. The company will be declaring their results on 9th February, and again they are likely to the same. My only caution is that when we see the Q3 results, we should not get mistaken on a year on year basis because in FY11 the company changed their depreciation method from 8% straight-line they reduced it to about 3% on the gas pipeline network. Due to that, quarter-on-quarter may not give the correct picture. But if you make a YoY comparison for the full year taking that into account the knocking off the depreciation differential, the results are likely to be the same."

"One can expect an EPS of Rs 9-9.5; cash EPS is very high at about Rs 13.54 and that is in fact helping the company to plough back the amount which they are earning every year in the form of investing into the new projects, either in the joint venture or on of their own."

"If you see the debt-equity ratio also is not very high. It is at about maybe 0.5-0.6% as of now and even if they have to make some borrowings for their new project it will not exceed more than 1%. So share is ruling at a PE multiple of 8 and it has a good value, so one can have this as a portfolio stock with a view of about two to three years which is capable to give a return of about 16-18% every year over next three to four years."

Disclosure: I have no personal holding in the above stock.