Motilal Oswal is bullish on Gujarat State Petronet recommended buy rating on the stock with a target price of Rs 300 in its research report dated August 12, 2020.
Motilal Oswal 's research report on Gujarat State Petronet
Available LNG regas capacity is expected to jump 54% from the current 24mmtpa to 40mmtpa over the next 2-3 years in Gujarat, presenting huge volume growth opportunity for Gujarat State Petronet (GUJS). On the gas evacuation front, reach of LNG terminals such as the Anjar-Chotila expansion and partial completion of the 77mmscmd/76mmscmd Mehsana Bhatinda/Mallavaram-Bhilwara pipelines should increase to the rest of India. Additionally, there are five industrial clusters in Gujarat classified as severely/critically polluted. A strict action like Morbi could increase transmission volumes for GUJS. We believe that Gujarat Gas (GUJGA) could see a major boost in volume CAGR of ~10% over the medium term on the highest volume base amongst peers (link to report). At 25% holding company discount, the 54% stake in Gujarat Gas (and 27.5% stake in Sabarmati Gas) provides a valuation of INR141/share for GUJS, implying 3.6x FY22E P/E for the standalone business.
Outlook
The stock is trading at 10.7x FY22E P/E and we value GUJS at 8x standalone and reiterate Buy with a target price of INR300/share.
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.
Read More