Prabhudas Lilladher has given Buy recommendation for Gujarat Gas with a target price of Rs. 675 in its research report issued on Mar 14, 2022

Prabhudas Lilladher’s research report on Gujarat Gas

We cut our FY22-24E estimates by 8-17% to factor in lower margins and volumes, given sustained high spot LNG prices. Recent EU decision to cut reliance on Russian gas (which accounted for 40% of gas supplies) will keep spot LNG at elevated levels. Also GGAS has cut supplies to industrial customers by ~1mmscmd to reduce dependence on spot LNG, which accounts for 21% of FY22E supplies. To tide over tight market conditions, recently GSPC (parent of GGAS) won tenders to secure 0.58mmscmd (5% of FY23E GGAS demand) at ~22% of Brent or USD24/mmbtu, thereby giving a pricing flexibility.

Outlook

We continue to like GGAS’s resilient business model that remains well placed to benefit from any resolution in geopolitical conditions. Our estimates factor in 14.1% CAGR volume growth over FY22-24E and margins of Rs5.0/scm (Rs5.6 earlier). Reiterate ‘BUY’ with a DCF based PT of Rs675 (Rs764 earlier).

More Info

At 13:02 hrs Gujarat Gas was quoting at Rs 506.00, down Rs 4.50, or 0.88 percent.

It has touched an intraday high of Rs 516.00 and an intraday low of Rs 503.40.

It was trading with volumes of 42,241 shares, compared to its thirty day average of 99,011 shares, a decrease of -57.34 percent.

In the previous trading session, the share closed up 0.17 percent or Rs 0.85 at Rs 510.50.

The share touched its 52-week high Rs 786.65 and 52-week low Rs 486.10 on 04 August, 2021 and 07 March, 2022, respectively.

Currently, it is trading 35.68 percent below its 52-week high and 4.09 percent above its 52-week low.

Market capitalisation stands at Rs 34,832.54 crore.

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