Sharekhan has given Buy recommendation for Gujarat Gas with a target price of Rs. 840 in its research report issued on Feb 08, 2022

Sharekhan’s research report on Gujarat Gas

Q3FY22 results were weak with a sharp 20%/23% miss in operating profit/PAT at Rs. 237 crore/Rs. 122 crore, down 61.4%/68.8% y-o-y as lower-than-expected EBITDA margin offset a slight beat in gas sales volume at 11.4 mmscmd (flat q-o-q). EBITDA margin of Rs. 2.3/scm, down 61.1% y-o-y was 24% below our estimate due to a steep 18% y-o-y rise in per unit opex and continued pressure on gross margin at Rs. 4.6/scm (down 41.3% y-o-y) due to elevated gas cost. Q4 volumes would be soft due to the temporary effect of higher industrial PNG price of Rs. 106/scm for Morbi volume >5.5mmscmd. However, GGAS has withdrawn differential pricing and added contractual volume of 1 mmscmd and thus see normalized volume of 12mmscmd by Mar’22. Likely lower spot LNG price by $10/mmBtu for March 2022 would aid margins.

Outlook

We believe that recent stock price correction factors in near-term margin concerns and once spot LNG prices normalise, we expect earnings momentum to pick up. Hence, we maintain Buy rating on Gujarat Gas with an unchanged PT of Rs. 840.

More Info on Gujarat Gas

At 17:30 Gujarat Gas was quoting at Rs 656.90, up Rs 0.20, or 0.03 percent.

It has touched an intraday high of Rs 665.90 and an intraday low of Rs 654.60.

It was trading with volumes of 17,518 shares, compared to its thirty day average of shares, a decrease of percent.

In the previous trading session, the share closed down 0.94 percent or Rs 6.20 at Rs 656.70.

The share touched its 52-week high Rs 786.65 and 52-week low Rs 436.60 on 04 August, 2021 and 17 February, 2021, respectively.

Currently, it is trading 16.37 percent below its 52-week high and 50.69 percent above its 52-week low.

Market capitalisation stands at Rs 45,220.35 crore.

 

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