Hold Gujarat State Petronet; target of Rs 180: ICICI Direct

ICICI Direct's research report on Gujarat State Petronet

Gujarat State Petronet (GSPL) reported its Q4FY19 results, which were below our estimates on the profit front on account of higher than estimated other expenses and lower volumes. Revenues increased 23.8% YoY to Rs 433.9 crore, below our estimate of Rs 467.1 crore due to lower-than-expected volumes, which was at 32.4 mmscmd vs. our estimate of 35 mmscmd. Increase in other expenses by 77.1% YoY to Rs 89.6 crore (our estimate: Rs 57.4 crore) led to EBITDA at Rs 329.3 crore, below our estimate of Rs 397.7 crore. Subsequently, PAT was at Rs 153.3 crore, below our estimate of Rs 200.2 crore.

Outlook

We value GSPL on an SOTP basis with investments at ~Rs 91 per share and standalone business at ~Rs 89 per share to arrive at a target price of Rs 180 with HOLD recommendation.