Broker\'s call: Gujarat Gas (Buy)

Stocks

Broker's call: Gujarat Gas (Buy)

| Updated on June 08, 2020 Published on June 09, 2020

Centrum Broking

Gujarat Gas (Buy)

CMP: ₹288.6

Target: ₹315

Gujarat Gas reported its highest ever volumes (about 10 mmscmd, up 53 per cent y-o-y), highest ever profit after tax (PAT) (₹250 crore, up 114 per cent y-o-y) and second highest ever EBITDA of ₹440 crore (+74 per cent y-o-y) despite the impact of one week of Covid-19 shutdown in Q4.

Reported EBITDA/PAT of ₹430/250 crore was impacted by Covid-related costs of about ₹16 crore. Adjusted earnings were lower than Centrum’s estimate of ₹270 crore, with higher volumes (estimated 9.7 mmscmd) being offset by lower margins of ₹7.1/₹4.9 per scm Gross/EBITDA versus estimated ₹7.5/₹5.3 per scm. FY20 adjusted EBITDA/PAT of ₹1,650/920 crore (adjusted for normalised tax rate of 25.2 per cent versus 1.2 per cent reported) grew 67.6/113 per cent y-o-y.

While FY20 results were spectacular, focus now shifts to FY21, with a weak Q1 in prospect (we expect 55 per cent volume decline to 4.1 mmscmd) but also a sharper recovery seen since Lockdown 4.0 (current volumes in June have crossed 6mmscmd), we believe FY22E will revert to strong growth over FY20 levels and remain positive. Reiterate ‘buy’, with target price of ₹315.

Published on June 09, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
Broker's call: Bharat Forge (Buy)