Motilal Oswal's research report on Gujarat State Petronet
GUJS reported an in line 1QFY23, with lower-than-estimated volumes offset by strong tariffs of INR1523/scm, led by use-or-pay contracts as well as change in volume mix on HP/LP networks. High spot LNG prices, at USD42/mmbtu, in Jul’22 remain a concern over the strong volume offtake in 2QFY23 as well. Moreover, the shutdown of several Ceramic units, given the high inventory, will impact volume in the near term. We remain optimistic about volume growth as long-term growth is expected from CGDs, and the Fertilizer and Refining sectors. Phase I of the Mehsana-Bhatinda pipeline has already turned cash flow profitable. Phase II is expected to be commissioned by the end of FY23, following which total volumes through this pipeline should reach 9.5- 10mmscmd.
Outlook
Investments in GUJGA and Sabarmati Gas, at a 25% holding discount, provide a valuation of INR223. Valuing the core at 5x, adjusted FY24 EPS at INR19.2, and adding the value of investments, we arrive at our TP of INR319. We maintain our Buy rating.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Gujarat State Petronet - 050822 - moti
Copyright © e-Eighteen.com Ltd All rights resderved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express writtern permission of moneycontrol.com is prohibited.
