Hold Gujarat State Petro; target of Rs 180: JM Financial

JM Financial's research report on Gujarat State Petro

GSPL reported 4QFY18 EBIDTA of INR 2.89bn (-3% QoQ/+27% YoY) marginally below JMFe of 3.08bn mainly on account of higher expenses, which were reported at INR 612mn, against our estimate of INR 495mn. However, a higher tax rate of 38% (against our estimate of 33%) and lower other income resulted in PAT of INR 1.57bn, significantly below our estimate of INR 1.82bn.

Outlook

We continue to like GSPL’s strong cash flow business but the increased debt on back of the recently-acquired additional stake in Gujarat Gas and the investment for the new cross-country pipelines constrain us to maintain a HOLD with a revised DCF based TP of INR 180 (INR 150 previously).