Shares of Gujarat Gas added nearly 18 percent intraday on July 31 after the company reported strong numbers for the quarter ended June 2019.
The company posted a 100 percent jump in its consolidated profit at Rs 234 crore in Q1FY20, against Rs 116.6 crore in the quarter ended March 2019.
Revenue rose 36 percent QoQ to Rs 2,670.8 crore versus Rs 1,963.3 crore in Q4FY19.
Earnings before interest, tax, depreciation and amortization (EBITDA) was up 83.6 percent at Rs 466.5 crore against Rs 254.1 crore, while margin was up 450 bps at 17.8 percent against 13.3 percent QoQ.
The broking house Citi has maintained buy call on the stock and raised price target to Rs 265 from Rs 230 per share.
According to Citi, the company has reported an extremely strong Q1 with volumes surging 41 percent, QoQ. In the Q4 the volumes surged to 9.2 MMSCMD versus 6.5 MMSCMD.
The brokerage feels that the network tariff regulation is unlikely to be disruptive and raised volume and margin estimates on strong Q1.
It raised FY20/21/22 earnings estimates by 36/ 21/ 17 percent.
CLSA has maintained buy rating on Gujarat Gas with target raised to Rs 210 from Rs 195 per share.
The broking house expect earnings to double over FY19-21 as standalone Q1 net profit far exceeded the forecast.
It raised EPS estimate 20-23 percent and 13x FY21 PE making Gujarat Gas a compelling buy, it added.
At 0956 hrs, Gujarat Gas was quoting at Rs 175.25, up Rs 11.65, or 7.12 percent on the BSE.
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