ICICI Direct has given Buy recommendation for Gujarat Gas with a target price of Rs. 505 in its research report issued on Feb 09, 2021

ICICI Direct’s research report on Gujarat Gas

Gujarat Gas’ Q3FY21 results were better than our estimates on all fronts. Revenues increased 12.9% YoY at Rs 2829.4 crore (our estimate: Rs 2608.5 crore) as sales volume jumped 22.9% YoY during the quarter. Sales volume at 11.4 mmscmd was above estimate of 10.6 mmscmd. Realisation was at Rs 26.9/scm (our estimate: Rs 26.7/scm). Higher-than-expected realisation coupled with lower gas costs led to increase in gross margins that improved by Rs 1.2/scm YoY to Rs 7.8/scm (our estimate: Rs 7.3/scm). EBITDA was at Rs 614.8 crore, up 65.9% YoY (our estimate: Rs 476.4 crore). Subsequently, PAT increased 99.5% YoY to Rs 392.2 crore (our estimate: Rs 280.1 crore).

Outlook

We roll over valuations to FY23 and maintain BUY on the stock with a revised TP of Rs 505 (21x FY23E EPS) (earlier Rs 400/share).

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