Accumulate Gujarat State Petronet; target of Rs 196: KRChoksey

KRChoksey's research report on Gujarat State Petronet

Net revenues came in at INR 3.5 bln (+43% YoY, +0.1% QoQ) driven by higher transmission volumes. The gas transmission volumes increased by 45.7% YoY & 1.7% QoQ to 34.1 mmscmd, while the implied transmission tariff came in at INR 1.14/scm (-1.7% YoY, 0.6% QoQ). The OPM remained unchanged on a YoY basis at 82.5%. However, it declined on a QoQ basis (-230 bps) due to higher other expenses (+20.1% QoQ).

Outlook

At a CMP of INR 181, GSPL is trading at 13.9x FY19E EPS and 13.1x FY20E EPS. We valued the company by assigning a multiple of 15x on the FY19E EPS of INR 13.1 and arrived at a target price of INR 196 (potential upside – 8.28%). We change our rating to ACCUMULATE on the stock.