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Last Updated : Aug 14, 2020 12:23 PM IST | Source: Moneycontrol.com

Buy Gujarat State Petronet; target of Rs 300: Motilal Oswal

Motilal Oswal is bullish on Gujarat State Petronet recommended buy rating on the stock with a target price of Rs 300 in its research report dated August 12, 2020.

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Motilal Oswal 's research report on Gujarat State Petronet


Available LNG regas capacity is expected to jump 54% from the current 24mmtpa to 40mmtpa over the next 2-3 years in Gujarat, presenting huge volume growth opportunity for Gujarat State Petronet (GUJS). On the gas evacuation front, reach of LNG terminals such as the Anjar-Chotila expansion and partial completion of the 77mmscmd/76mmscmd Mehsana Bhatinda/Mallavaram-Bhilwara pipelines should increase to the rest of India. Additionally, there are five industrial clusters in Gujarat classified as severely/critically polluted. A strict action like Morbi could increase transmission volumes for GUJS. We believe that Gujarat Gas (GUJGA) could see a major boost in volume CAGR of ~10% over the medium term on the highest volume base amongst peers (link to report). At 25% holding company discount, the 54% stake in Gujarat Gas (and 27.5% stake in Sabarmati Gas) provides a valuation of INR141/share for GUJS, implying 3.6x FY22E P/E for the standalone business.



Outlook


The stock is trading at 10.7x FY22E P/E and we value GUJS at 8x standalone and reiterate Buy with a target price of INR300/share.


For all recommendations report, click here


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First Published on Aug 14, 2020 12:23 pm
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