ICICI Direct recommended hold rating on Gujarat State Petronet with a target price of Rs 200 in its research report dated November 09, 2018.
ICICI Direct's research report on Gujarat State Petronet
Gujarat State Petronet (GSPL) reported its Q2FY19 result, which were above our estimates mainly on account of tariff revision with effect from April 1, 2018. Adjusting for the tariff revision, the results were in line with our estimates. Revenues increased 78.7% YoY to Rs 598.3 crore, above our estimate of Rs 334.8 crore Volumes at 35 mmscmd came in line with our estimates. Lower volume offtake from the power sector led to a 4% QoQ decline in volume. Transmission tariffs at Rs 1.81/scm came in above our estimates on account of tariff revision. Subsequently, EBITDA at Rs 516.3 crore came in above our estimates of Rs 285.5 crore Profitability at Rs 323.3 crore came in above our estimates. Higher other income of Rs 38.4 crore due to dividend from Gujarat Gas also contributed to higher profitability QoQ.
We value GSPL on an SOTP basis with investments at ~Rs 79.6 per share (Rs 82.6 earlier) and standalone business at Rs 120.7 per share to arrive at a target price of Rs 200 with HOLD recommendation.
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