Add Gujarat State Petronet, target price Rs 265: HDFC Securities

HDFC Securities has add call on Gujarat State Petronet with a target price of Rs 265. The current market price of Gujarat State Petronet is Rs 240.8. 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 13696.23 Crore) operating in Gas & Petroleum sector.

Gujarat State Petronet Ltd. key Products/Revenue Segments include Income From Transportation Services, Electricity and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 5558.32 Crore, up 10.87 % from last quarter Total Income of Rs 5013.28 Crore and up 61.15 % from last year same quarter Total Income of Rs 3449.24 Crore. Company reported net profit after tax of Rs 616.18 Crore in latest quarter.

Investment Rationale
The ADD rating on Gujarat State Petronet with a TP of INR 265 is premised on (1) muted transmission volume over FY22-24E due to high spot LNG price environment, driven by geopolitical issues, low global inventories, and pick-up in demand post reopening of economies and (2) limited upside triggers in the near term. Hence, the brokerage believes that, at present, the stock is fairly valued with an RoE of 16% in FY24E and combined FCF of INR 36bn over FY22-24E.

Promoter/FII Holdings
Promoters held 37.63 per cent stake in the company as of 30-Jun-2022, while FIIs owned 16.54 per cent, DIIs 21.79 per cent.