Dear All,
Forwarding you the Result Update on Gujarat Gas for 1QCY2011 with a Buy recommendation and a Target Price of `418 (12 months).
Gujarat Gas’s (GGAS) 1QCY2011 PAT declined by 12.2% qoq to `72cr (`82cr) on lower gross spread. However, on a yoy basis, PAT grew by robust 16.9% during the quarter. We recommend Buy on the stock.
Gross spread cools off sequentially on higher LNG price: For 1QCY2011, GGAS reported top-line growth of 29% yoy to `529cr (`410cr). Average realisations increased to `17.2/scm (`13.8/scm) during the quarter. Gross gas spread cooled off to `4.6/scm during the quarter on account of higher cost of LNG procured to meet the company’s gas requirements.
Outlook and valuation: GGAS’s volumes during the quarter were supported by higher gas flow from RLNG, following lower supply from the PMT field. Thus, reliance on RLNG increased to support the company’s volume growth.
The company has also entered into a firm contract with British Gas (BG) to meet its growth requirements. The company continues to explore entering into such long-term RLNG contracts and, thus, soften supply-side constraints. Besides volume growth, to maintain margins, the company plans to price its gas to its various consumers, taking into consideration the pricing of alternative fuels. We believe through this strategy, the company will be able to maintain its volume growth and margins going ahead. Thus, we recommend Buy on the stock with a target price of `418.
Kindly click on the following link the view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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