KRChoksey’s research report on Gujarat State PetronetGujarat State Petronet reported revenue of INR. 252.8 crs down 2.5% Q-o-Q and 28.2% Y-o-Y due to lower tariff. EBITDA was also down 1.3% and 30.8% on a Q-o-Q and Y-o-Y basis at INR. 224.2 crs. Profit stood at INR. 108.6 crs (affected by higher depreciation, higher interest. Transmission volumes stood at 24.3 mmscmd which was up 0.5% Q-o-Q and 0.5% Y-o-Y. Implied tariff was lower 5.3% on a Q-o-Q and 4.5% on a Y-o-Y basis to INR 1,070/mscm.Overall Valuation:We remain positive on the stock considering the following trigger points. 1- ONGC to enhance domestic production by 10‐15mmscmd over 1‐3 years. 2- CBM production is poised to grow by 6‐8mmscmd over 2‐3 years. 3- Commissioning of Mundra terminal by FY18. We model transmission tariff at INR 1215, 1230 and 1267 mscm and volumes at 25.8, 27.5 and 29.3 mmscmd for FY16/17/18. We assign ‘ACCUMULATE’ rating on the stock with the target price of INR 135/share based on the mix of EV/EBITDA, P/E and DCF methodology. Currently Stock trades at 14.2x FY17E EPS of INR 8.9.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.
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