Accumulate Gujarat State Petronet; target of Rs 251: Dolat Capital

Dolat Capital's research report on Gujarat State Petronet

Revenue declined 15% YoY to Rs 5.4bn in Q4FY20 - came below our estimate. Nationwide lockdown resulted in drop in revenues. Sharp fall in volumes was partially offset by price hikes implemented pre-lockdown period. Further price hikes would depend on the demand scenario. We believe that the margins would remain high considering larger contribution of distribution business compared to retail business. In the long run, we believe that the company would continue its strong performance by increasing penetration in South and West and is likely to further benefit from premiumization. Relaxo should continue to outpace Bata in terms of revenue growth and the revenue gap would narrow, going ahead.

Outlook

We have revised our FY21E EPS estimates to Rs 10.4 (-5.5%) and FY22E EPS estimates to Rs 12.9 (+2.6%). We value the stock at 60x FY22E EPS (2.5x PEG) to arrive at a TP of Rs 773. Maintain Accumulate. (Buy on Dips).

Gujarat State Petronet 09062020-dolat

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