Buy GSPL; target of Rs 113: IIFL

IIFL is bullish on Gujarat State Petronet (GSPL) and has recommended buy rating on the stock with a target of Rs 113 in its June 14, 2011 research report.

Gujarat State Petronet Ltd (GSPL) has a gas pipeline network of 1,900kms in the state of Gujarat. With Gujarat accounting for about 30% of the natural gas demand in the country and rapid growth in industrialization in the state, the demand for gas is expected to surge. Furthermore, supplies from Petronet LNG and E&P players are also increasing over the medium term. This would translate into increased demand for transmission capacity. GSPL plans to invest about Rs12- 15bn during FY12E and FY13E to increase its reach in the state of Gujarat. The company aims to have a transmission grid spreading over 2,400kms with an outreach to all 25 districts of Gujarat by end of FY12E. We expect GSPL to witness a volume CAGR of 9% during FY11- 15E. Expansion beyond Gujarat to drive long term revenue growth
In the recent past, a consortium led by GSPL (52% stake) won two bids for cross-country pipelines enabling it to expand its operations beyond Gujarat. The two pipelines are 1) Mallavaram (Andhra Pradesh) to Bhilwara (Rajasthan)

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