INSUBCONTINENT EXCLUSIVE:
Edelweiss Financial Services has a buy call on Gujarat State Petronet with a target price of Rs 262.
The current market price of Gujarat
State Petronet is Rs 188.10.
Time period given by the brokerage is one year when Gujarat State Petronet price can reach the defined target
Investment rationale by the brokerage:Demand-supply analysis suggests 5.5 per cent volume CAGR: Our granular analyses of both gas demand
and LNG supplies suggest a conservative volume CAGR of 5.5 per cent over the next five years
Firstly, LNG terminal capacity is poised to more than double over the next five years with GSPL exclusively having access to three of the
Secondly, on the demand-side, we expect enhanced demand from city gas distribution (CGD), power and refining to more than offset a 20 per
Finally, with the Badmer- Palanpur pipeline slated for commissioning in March 2019, GSPL will be able to reach new markets outside Gujarat,
adding 10 per cent to volumes.
Healthy FCF to enable net cash balance sheet by FY22E: We expect GSPL to retire the entire Rs 25bn of debt
assumed for the Gujarat Gas acquisition by FY22
are highly compelling at 5.5x FY20E PER
Even on an unadjusted basis, GSPL quotes at a a 26 per cent/31 per cent discount to India gas/global pipeline peer group average PER
