Accumulate Gujarat State Petronet; target Rs 78: Emkay
Brokerage house Emkay Global Financial Services is bullish on Gujarat State Petronet (GSPL) and has recommended accumulate rating on the stock with a target price of Rs 78 in its July 01, 2013 research report.
July 02, 2013 / 18:27 IST
Emkay's research report on Gujarat State Petronet (GSPL)
"A tariff cut of 69 percent in GSPL's low pressure pipeline by PNGRB is slightly negative for the company, as implementation of the tariff order would be applicable from November 2008 (retrospective effect). The retrospective impact for the same comes at Rs2.3bn, and the recurring impact comes at Rs0.38bn (7 percent of the FY13PAT). However, the company has appealed against PNGRB in Appellate Tribunal of Electricity (APTEL) for implementation of the order with retrospective effect. Hence, we have not changed our estimates for FY14-15E.""However, we believe, the stock has already corrected and factored in the tariff concern when the high pressure tariff was announced by PNGRB in 3QFY13, on which major volume flows. Hence, we do not perceive the tariff cut as a significant negative for the company, since the major concern is transmission volume, which is expected to improve from FY15 onwards on the back of capacity expansion from PLNG and Shell Hazira. Moreover, any improvement in domestic production would be an add-on bonus for the company's transmission volume.""We maintain our accumulate rating on the stock with a target price of Rs 78, as it has corrected from Rs70 to Rs56 and do not see it fall below the current level, as valuation provides comfort at this level. At the CMP of Rs 56, the stock trades at 7.4x FY15E EPS and 0.9x P/BV," says Emkay Global Financial Services research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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