ICICI Direct recommended hold rating on Gujarat State Petronet with a target price of Rs 210 in its research report dated August 06, 2019.
ICICI Direct's research report on Gujarat State Petronet
Gujarat State Petronet (GSPL) reported its Q1FY20 results, which were above our estimates on account of higher volume sales than expected. Revenues increased 31% YoY to Rs 512.6 crore, above our estimate of Rs 442.4 crore due to higher volumes of 38.2 mmscmd (our estimate of 32.7 mmscmd). The company also benefitted from revision in tariffs on a YoY basis. However, other expenses increased 151.3% YoY to Rs 97.2 crore, which led to lower EBITDA growth of 16.9% YoY. PAT was at Rs 206.1 crore (up 42.7% YoY), above our estimate of Rs 172.8 crore.
Hence, investors can directly invest in Gujarat Gas instead of GSPL. We value GSPL on an SOTP basis with investments at ~Rs 115/share and standalone business at ~Rs 95/share to arrive at a target price of Rs 210 with HOLD recommendation.
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