Buy Gujarat State Petronet, target of Rs 36: KRChoksey
KRChoksey has maintained its buy rating on Gujarat State Petronet with a target price of Rs 36 in its March 2, 2009 research report. “For the FY09 GSPL yet to provide social contribution; however we have taken conservative approach and provided 30% of PBT in our estimates. Recent increase in tariff largely due to current lower post tax RoCE of 11.5% vs regulated post tax RoCE of 12%. Also in initial years tariffs to be calculated based on lower volumes (60% capacity in 1st year and increasing 10% each year to 100% by 5 year) than the pipeline’s capacity.”
“Management doesn’t expect any downward revision in tariff in near future. Management has not ruled out further equity investment in GSPC Gas Company Ltd and Sabarmati Gas Limited which are developing CGD network in Gujarat. Capex for FY09 be Rs 400 crore and FY10 be Rs 250 crore. Capitalization of Bharuch-Jamnagar pipeline after KG D6 gas flow. We maintained our BUY rating on the stock with target price of Rs 36,” says KRChoksey’s research report.
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