Ambit Capital downgrades Gujarat state Petronet to 'sell'

Gujarat State Petronet
cmp: Rs 39.75
target price: Rs 45

Ambit Capital has downgraded Gujarat State Petronet to ���sell��� from buy, citing recent appreciation in stock price and no ���visible upside triggers��� as the main reasons. While we take cognisance of the benefit accruing to GSPL on account of the higher domestic gas supplies from the recently-commissioned KG-D6 gas block, we believe the current stock price factors in health volume growth, going forward, leaving limited room for volume surprises,��� the broking house said in a report.

���We note that the stock is quoting at a one-year forward multiple of 2.1x and 8x P/BV (price to book value) and P/CEPS (price to cash earnings per share), respectively,��� Ambit said. ���Given an expected RoE (return on Equity) of 7% for FY10, valuations appear stretched,��� it added.