Buy GIPCL; target of Rs 78: Angel Broking

Angel Broking is bullish on Gujarat Industries Power Co (GIPCL) and has recommended buy rating on the stock with a traget of Rs 78 in its August 3, 2012 research report.

“GIPCL posted 28.0% yoy growth in Net Profit to Rs 55cr in for 1QFY2013. The company’s operating margin expanded by 75bp yoy to 38.2% due to higher PAF yoy at all units except Vadodara station I. PAF for Vadodara station I stood at healthy 95.4% for the quarter, although lower than 99.6% in 1QFY2012. Strong operational performance: For 1QFY2013 GIPCL posted a 2.3% yoy growth in net revenue to Rs349cr. The 250MW SLPP Station I (Comprising Unit-I & II of 125MW each) has been restored to normal operations, after repairing the damaged rotor. SLPP stations I and II reported higher PLF yoy at 90.7% (75.8% in 1QFY2012) and 89.6% (71.7% in 1QFY2012), respectively. Vadodara stations I and II operated at PLF of 58.8% (64.4% in 1QFY2012) and 34.0% (60.2% in 1QFY2012), respectively. Vadodara station II reported a lower PLF for the quarter due to low off-take. OPM improved by 75bp yoy to 38.2%.”
“For 1QFY2013, GIPCL reported a 2.3% yoy growth in top-line to Rs 349cr. The company’s operating margin expanded by 75bp yoy to 38.2% due to higher PAF yoy at all units except Vadodara station I. PAF for Vadodara station I stood at healthy 95.4% for the quarter, although lower than 99.6% in 1QFY2012. SLPP stations I and II also reported higher PAF yoy at 95.5% (90.1% in 1QFY2012) and 94.8% (78.3% in 1QFY2012), respectively. Vadodara station II operated at high PAF of 99.9% (90.8% in 1QFY2012).”
“GIPCL is well placed in terms of fuel security, with the entire fuel requirement of 500MW SLPP stations I and II met from captive lignite mines. Further, power generated by the company has assured offtake through PPAs signed under the cost-plus model, ensuring RoE of 14% (excl. generation linked incentives) at 75% and 80% PAF for lignite and gas-based plants. At the CMP of `66, the stock is trading attractively at 0.6x FY2014 P/BV. We have assigned a P/BV multiple of 0.7x on FY2014 book value to arrive at a target price of Rs 78. We maintain our buy recommendation on the stock,” says Angel Broking research report. Shares held by Financial Institutions/Banks  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. To read the full report click on the attachment

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