Accumulate Gujarat Gas; target of Rs 334: Dolat Capital

Dolat Capital recommended accumulate rating on Gujarat Gas with a target price of Rs 334 in its research report dated September 09, 2020.

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September 10, 2020 / 03:22 PM IST

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Dolat Capital's research report on Gujarat Gas

Growing environmental concerns and imminent threats to the ecosystem have compelled the world to identify opportunities for developing clean energy. Natural gas is the cleanest and most efficient of the fossil fuels. It is only fossil fuel whose share of primary energy mix is expected to grow, as it has the potential to play an important role in the world’s transition to a cleaner, more affordable and secure energy future due to it high energy content, which results in lower emissions of carbon and volatile organic compounds at combustion, relative to coal and oil. Gujarat Gas has an expanse of around 1,69,700 sq. km of licensed area under its umbrella and continues to hold the leadership position of being the largest City Gas Distribution company in terms of market share catering to more than 14.4 lakh residential consumers, over 12,600 commercial customers, dispensing CNG to 396 CNG stations for vehicular consumers and providing clean energy solutions to over 3,700 industrial units through its wide spread operations with around 24,300 km of Natural Gas pipeline network.

Outlook

We however expect major volumes to start clocking in from H2FY21. NGT’s order to switch to gas in other industrial areas than Morbi, increasing CNG consumption and additional volumes coming from the recently completed 9th and 10th CGD rounds where Gujarat gas has won 7GA’s, such aggressive expansion plans reiterates our confidence on the stock, we maintain Accumulate with a DCF based target price of Rs 334.

For all recommendations report, click here