Buy Gujarat State Petronet, target price Rs 500: Motilal Oswal

Motilal Oswal has buy call on Gujarat State Petronet with a target price of Rs 500. The current market price of Gujarat State Petronet is Rs 340.5. Time period given by analyst is one year when Gujarat State Petronet Ltd. price can reach defined target.

Gujarat State Petronet Ltd., incorporated in the year 1998, is a Mid Cap company (having a market cap of Rs 19053.42 Crore) operating in Gas & Petroleum sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 3790.79 Crore, up 14.65 % from last quarter Total Income of Rs 3306.35 Crore and up 19.34 % from last year same quarter Total Income of Rs 3176.49 Crore. Company reported net profit after tax of Rs 555.43 Crore in latest quarter.


Investment Rationale
Since GUJS is currently operating at 90-95% utilization rate, the company needs to incur a capex of INR45.4b to accommodate the rise in volume. This would ensure that tariffs are not cut for the HP gas grid. The stock trades at 16x FY23E EPS of INR20 and 10x FY23E EV/EBITDA. The brokerage maintains Buy rating with a TP of INR500/share.

Promoter/FII Holdings
Promoters held 37.6 per cent stake in the company as of June 30, 2021, while FIIs held 17.5 per cent, DIIs 30 per cent and public and others 14.9 per cent.