Motilal Oswal has given Buy recommendation for Gujarat State Petronet recommended buy rating on the stock with a target price of Rs 400 in its researc with a target price of Rs. 400 in its research report issued on Jun 03, 2021

Motilal Oswal’s research report on Gujarat State Petronet

GUJS reported an in line 4QFY21. Transmission volumes at 33.8mmscmd, with implied tariff at INR1,277/mscm. Volumes were impacted by an abrupt spurt in spot LNG prices to USD20-30/mmbtu in Jan-Feb’21, which primarily impacted Power sector demand (-48% QoQ). As per our interaction, current volumes stand ~36mmscmd. GUJS expects a revival of 1-2mmsmcd in volumes over the next couple of days from CGDs as lockdown restrictions are eased. The Mehsana-Bhatinda pipeline, which was earlier expected to be commissioned in Jun’21, is delayed owing to the second COVID wave and the farmers protest. It is now guided to be completed in 2HCY21. We lower our FY22E volumes to 40mmscmd (from 42mmscmd earlier).

Outlook

The stock trades at 15.2x FY23E EPS of INR18.8 and 9.4x FY23E EV/EBITDA. We maintain our Buy rating with a TP of INR400/share.

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