Buy Gujarat Gas; target of Rs 553: Prabhudas Lilladher

Rama Steel Tubes: Nomura Singapore buys 1 lakh shares in Rama Steel Tubes. Nomura Singapore bought 1 lakh equity shares in the company via open market transactions on June 15. These shares were acquired at an average price of Rs 371 per share.

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Prabhudas Lilladher's research report on Gujarat Gas

GGAS reported lower than expected Q1 results with EBIDTA/PAT of Rs6.1bn (-13%Q/Q; PLe Rs6.5bn) and Rs3.8bn (-14%Q/Q; PLe Rs4.1bn). Q1 industrial volumes were flat QoQ, as demand shifted to Propane due to seasonally low prices. However it will increase in H2 with winter demand. GGAS has tied in spot LNG volumes below USD28/mmbtu till Feb-23 (price is ~USD22-25/mmbtu till Sept-22) which will support volumes as demand shifts in H2 when propane prices increase. Also at current Brent prices, blended industrial gas price will be down USD1.1/mmbtu for Q2 (Q1 avg USD112/bbl).

Outlook

We like GGAS as a structural play on industrial gas demand and maintain our FY23-24E earnings. Reiterate ‘BUY’ with a DCF based PT of Rs553 (Unchanged).

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Gujarat Gas - 040822 - prabhu