3 GUJGASLTD share price target reports by brokerages below. See what is analyst's view on GUJGASLTD share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Given strong thrust on less polluting fuels (post NGT order), we expect gas volume off-take to improve once normalcy prevails. Currently, the company is supplying 5.5 mmscmd of gas (as against 9.44 mmscmd in FY20) due to lower demand from Morbi. Hence, we now expect GGCL to report an EPS of Rs.10.32 in FY21E (earlier Rs.13.03) and Rs.15.97 in FY22E (earlier Rs.15.8). We now recommend ADD (earlier BUY) on the stock. We maintain our positive view on GGCL with a PE multiple based price target of Rs.303/share (earlier Rs.269). Margin improvement and strong revenue visibility in the medium to long term makes us positive on its growth prospects. Additionally, strong free cash flow and healthy return ratios also provide high comfort. We value GGCL at ~19x PE based on EPS of Rs.15.97 for FY22E.
We expect GGL to report an EPS of Rs.11.6 in FY20E and Rs.12.6 in FY21E. We recommend ADD on the stock. We maintain our positive view on GGL with a multiple based price target of Rs.194/share. Margin improvement and strong revenue visibility makes us positive on its growth prospects. Additionally, strong free cash flow and healthy return ratios also provide high comfort. We value GGL at 15.4x PE (25% discount to its peers) based on EPS of Rs.12.6 for FY21E.
Gujarat Gas has benefited immensely from the latest NGT order. This will further help the company to maintain steady profit growth. Also, a rapid expansion by way of securing licences in newer areas will lead to sustainable volume growth. We value Gujarat Gas at 18x FY21E EPS of | 11.5 to arrive at a target price of Rs 205 with a BUY recommendation.
To accommodate the stellar Q1FY20 performance, we raise EPS estimates for FY20/21E from Rs 8.8/11.1 to Rs 11.1/11.7. We expect (1) Low LNG prices to boost industrial volumes; (2) The development of CGD ecosystem across Gujarat to push CNG volumes. We remain positive on the company as it generates OCF yield of almost 9.5% and RoE of >25% over FY21/22E. Valuations are contextually unreasonable at 15.4/14.6x FY21/22E EPS.Post the outstanding Q1FY20 performance, we maintain BUY on GGL. Our target is Rs 246/sh (20x Jun-21E EPS).
With recent strategy of management to focus on volumes, we believe that operating spreads should sustain at 4.5/SCM. Overall volumes increased by 43% YoY and 41% QoQ, with industrial segment growing at 57% YoY and 68% QoQ. Major growth in industrial segment has come from Morbi region post NGT’s 6Mar’19 order to ban the use of coal gasifiers in Morbi region. Gujarat gas will benefit from the spurt in demand of natural gas from Morbi region as well as competitive LNG prices over alternate fuels. Upgrade to Buy with a target price of 216 (DCF Method).
In Q1FY20, the company has reported significantly better than expected performance. We have revised our earnings estimates, accordingly. We now expect GGCL to report an EPS of Rs.13.4 in FY20E (earlier Rs 6.4) and Rs.13.8 (earlier Rs 7.4) in FY21E. We recommend BUY on the stock. We maintain our positive view on GGCL with a multiple based price target of Rs.194/share (earlier Rs.157/share). Margin improvement and strong revenue visibility makes us positive on its growth prospects. Additionally, strong free cash flow and healthy return ratios also provide high comfort. We value GGCL at 14x PE (discount to its peers due to higher exposure towards industrial volume) based on EPS of Rs.13.8 for FY21E.
Given the management’s recent strategy of focusing on volumes, we believe operating spreads of ` 4.2 per SCM should sustain. Volumes are likely to rise, as distribution reach expands, but will take some time. Volume de-growth is a concern, due to slower industrial activity. The recent rally in the stock price lead us to believe that high single digit volume growth, with a stable spreads scenario, is already factored in the price. Downgrade to Sell, with a target price of Rs 153.
GUJGA is trading at 19.3x FY21 EPS of INR7.6. We raise our volume assumption to 7.4mmscmd /8.2mmscmd in FY20/21 from our earlier assumption of 7.1mmscmd/7.9mmscmd. We assume EBITDA/scm of INR3.9/4.0. Valuing the company at 24x (unchanged) FY21 EPS of INR7.6, we reiterate our Buy recommendation with a target price of INR183 (earlier: INR165).
We estimate Revenue, EBITDA and EPS to grow at a CAGR of 17%, 12% and 23%, respectively over FY18-21E. We initiate coverage on GGCL with a BUY rating and a multiple based price target of Rs.157/share. Margin improvement and strong revenue visibility makes us positive on its growth prospects. Additionally, strong free cash flow and healthy return ratios also provide high comfort. We value GGCL at 20x PE based on EPS of Rs.7.9 for FY21E.
We have not changed our estimates as of now, but we note that an effective blanket ban could result in an immediate increase of 2.5mmscmd in volume (~38% of FY19E). Our base assumption for FY20/21E sales volume is 7.1 mmscmd/ 7.9mmscmd. Increase of 2.5mmscmd in volume would result in 35%/32% increase in EBITDA for FY20/FY21, considering no change in EBITDA/scm of INR3.9/INR4.0. GUJGA is trading at 20.1x FY20 EPS of INR6.4. We move our valuation to FY21 from Dec’20 and value the stock at 24x (20% premium to global peers due to the high potential in volume growth). With target price of INR165 (earlier INR162), we reiterate a Buy recommendation on the stock.
Volumes in line. Margins surprise. Upgrade to Accumulate - Gujarat Gas volumes were in line with estimates at 603 MMSCMD. Revenue at Rs 21 bn in line with estimates. We are positively surprised by the profitability performance Gujarat Gas took price hikes to negate increase in input cost. Gross spreads were higher by 49% on a sequential basis. This is probably the highest spread ever reported by Gujarat Gas after BG exit. In the past, Gujarat Gas has shown high level of spreads and revert to lower levels in the immediate following quarter. We will like to closely watch this trend in coming quarters. With recent strategy of management to focus on profitable volumes, we believe that margins should sustain around Rs 8 per SCM in the current quarter. Volumes are expected to increase as the reach expands and hence will take some time. We believe that if Gujarat Gas spreads can be sustained consistently, stock is due for a re-rating. We bring in FY21 estimates. Upgrade to Accumulate with a target price of Rs 141 based on DCF valuation.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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