ICICI Direct is bullish on Gujarat Gas has recommended buy rating on the stock with a target price of Rs 190 in its research report dated May 07, 2019.
ICICI Direct's research report on Gujarat Gas
Gujarat Gas reported a weak set of Q4FY19 numbers on the back of lower-than-expected volumes. However, the volume outlook remains robust with higher industrial volumes from Morbi. For the quarter, total reported volumes declined 3.8% YoY and came in at 6.5 mmscmd vs. our estimate of 6.8 mmscmd on account of lower volumes on the industrial front. Hence, revenues were at Rs 1907.6 crore (up 10% YoY), below our estimate of Rs 2008.8 crore. Gross margins were at Rs 7.6/scm (~up 22% YoY) in line with our estimate. However, higher-than-expected other expenses led to an increase in overall costs leading to an EBITDA of Rs 254.1 crore, below our estimate of Rs 303.9 crore.
We value Gujarat Gas at 20x FY21E EPS of Rs 9.5 to arrive at a target price of Rs 190 with a BUY recommendation.
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