Time period given by analyst is one year when Gujarat Gas Ltd. price can reach defined target. Gujarat Gas Ltd., incorporated in the year 2012, is a Mid Cap company (having a market cap of Rs 51904.62 Crore) operating in Gas & Petroleum sector.
Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 3087.21 Crore, down -10.46 % from last quarter Total Income of Rs 3447.75 Crore and up 181.21 % from last year same quarter Total Income of Rs 1097.84 Crore. Company reported net profit after tax of Rs 476.18 Crore in latest quarter.
Investment Rationale
Q1FY22 standalone EPS of Gujarat Gas (GGL) is up 8.1x YoY on a low base driven by surge in margins and volumes; EPS is up 36% QoQ, despite fall in volumes due to covid second wave, driven by margin surge. Surge in spot LNG (US$14.9- 16.9/mmbtu at latest futures) may mean rise in GGL’s gas cost for industrial consumers by 32-22% QoQ and steep fall in margins in Q2-Q3FY22E unless hefty price hikes are made. Average volume of 14mmscmd and margin of Rs4.9/scm are needed in the rest of FY22E to be in-line with annual estimate; it appears unattainable. The stock is pricing in long-term margin of Rs7/scm vs management guidance of Rs4.5-5.5/scm. The brokerage likes GGL’s strong volume growth prospects but downgrade it to SELL from Hold as share is pricing in lofty unattainable margin.
Promoter/FII Holdings
Promoters held 60.9 per cent stake in the company as of June 30, 2021, while FIIs held 8.2 per cent, DIIs 7.9 per cent and public and others 23 per cent.
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