Buy Gujarat Gas; target of Rs 583: Motilal Oswal

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Motilal Oswal's research report on Gujarat Gas

Total volumes came in lower-than-expected at 7.6mmscmd, with Morbi volumes at 2.7mmscmd, impacted by the shutdown of ceramic units of over a month in 2QFY23. EBITDA margin was in line at INR9.2/scm (our estimate of INR9/scm). Current sales stand at 8mmscmd. LPG consumption at Morbi stood at 0.8- 1mmscmd, with a discount of INR6/scm v/s gas. Propane consumption at Morbi stood ~2.5mmscmd, which is currently at a discount of INR12-13/scm. Spot LNG prices in 3QFY23 till date have fallen to USD28.9/mmBtu v/s USD45/mmBtu in 2Q. A further cooling of these prices will result in a volume recovery. We estimate an EBITDA/scm of INR7.1/INR6 in FY23/FY24 v/s INR5.3 in FY22.

Outlook

We maintain our Buy rating on the stock, with a TP of INR583 (at 28x FY24E EPS). Any underperformance in terms of EBITDA/scm or volume growth v/s our projection can pose a key risk to GUJGA.

For all recommendations report, click here

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.

Gujarat Gas - 14 -11-2022 - moti