Gujarat Gas was one of biggest gainers in last one year, rising 142 percent amid earnings growth and after National Green Tribunal's order to shut all coal-operated units of ceramic companies in Morbi, Gujarat.
Shares of Gujarat Gas climbed nearly 4 percent to hit a fresh high of Rs 313.45 intraday on February 7 even as ICICI Direct upgraded its rating on the stock to buy from hold after its Q3 earnings.
It was one of biggest gainers in last one year, rising 142 percent amid earnings growth and after National Green Tribunal's order to shut all coal-operated units of ceramic companies in Morbi, Gujarat.
The counter was quoting Rs 305.10, up Rs 3.15, or 1.04 percent, on the BSE at 13:33 hours IST.
"Gujarat Gas benefitted from the NGT order. We expect it to maintain strong sales volume contribution from industrial sales to overall volumes. Robust increase in volumes driven by regulatory tailwinds, further penetration in existing geographical areas (GAs) and aggressive expansion in newly acquired GAs will lead to sustainable long-term growth," the brokerage said.
"We roll over valuations to FY22E and revise our rating on the stock from hold to buy with a target price of Rs 355 (implying a potential upside of 17.6 percent from current levels)," it added.
Gujarat Gas reported Q3 FY20 result was in line with ICICI Direct's estimates on account of a healthy increase in sales volume.
Revenues increased 18.4 percent YoY to Rs 2,506.2 crore in Q3FY20, with volumes rising 42.2 percent YoY to 9.3 mmscmd, though realisations were marginally below its estimates at Rs 29.2 per scm due to sales mix in favour of industrial volumes.
EBITDA increased 15.4 percent YoY to Rs 370.5 crore and profit increased 42.4 percent YoY to Rs 196.5 crore in Q3FY20.
"With guidance of around 9 percent volumes growth over FY21-22, adoption of lower tax rate of 25.2 percent and soft gas costs, earnings remain poised to double in FY20 against FY19 and peer leading CAGR of 41 percent over FY19-22," said Centrum Broking, which reiterated its buy call on the stock with a target price of Rs 350.
Motilal Oswal also raised EPS estimates by 11/26 percent for FY20/21 and valued the company at 22x FY22E EPS. "We raised our target price from Rs 270 to Rs 340 and reiterated its buy rating," it said.
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