Dolat Capital Market is bullish on Gujarat Gas Petronet has recommended buy rating on the stock with a target price of Rs 231 in its research report dated November 11, 2020.
Dolat Capital Market's research report on Gujarat Gas Petronet
Gujarat State Petronet (GSPL) transmission volumes at 39.75 mmscmd (growth of 1.5% YoY and of 19.5% sequentially) above our estimates of 35.3 mmscmd. Tariffs were at ` 1.55/scm (de-growth of 10% YoY and growth of 3.3% QoQ). Revenue in line with our estimates. Revival of volumes were seen across segments hence the offtake of gas. Due to NGT’s 6Mar’19 order to ban the use of coal gasifiers in Morbi region, spurted Gujarat Gas volumes from its industrial belt of Morbi in the previous quarters, however with industrial units starting up and sales reaching 100% Pre Covid levels, volumes from CGD business have revived. We expect GSPL’s transmission volumes to increase from H2FY21 from Gujarat Gas volumes, other CGD projects and power sector. Volumes which was subdued from CGD segment in Q1FY21 because of lower industrial activity due lockdown is gaining pace.
With both volume and tariff outlook looking strong, we expect robust revenue growth along with profitability to reach normalized levels from H2FY21. Investments in Gujarat Gas and Sabarmati Gas will reap benefits. Investments in consortium for transnational pipelines is a concern in medium term. Considering these factors, we recommend Buy with a target price of Rs 231.
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