1
Please refer to important disclosures at the end of this report
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Gujarat Gas (GUJGA) is engaged in Natural Gas Business in India. Natural
gas business involves distribution of gas from sources of supply to centres of
demand and to the end customers. The company is steady in its operations
with 8.3% 3 yr sales CAGR. The growth momentum in sales sped up and the
TTM sales grew by 25.6% as on 3QFY19.
The company’s revenues are further expected to increase on the back of
PNG industrial volume growth on strict implementation of the NGT order,
ban on fuel oil use in Gujarat, Delhi Mumbai Industrial Corridor (DMIC) and
switching of Tarapur industrial units to PNG. Further in Maharashtra, the
NGT has issued order to the state’s PCB to prepare action plan against the
polluting units in Tarapur, which are still using fuel oil/petcoke. Same time,
GUJGA is aggressively pursuing expansion into newer areas, maintaining
capex guidance of Rs6-7bn annually. Initial strategy is to tap potential from
existing network from Rajasthan until rural Thane region near Mumbai.
Simultaneously, this would help tapping volumes from new areas such as
Dahej, Punjab (GUJGA has license for about 6 areas) and Rajasthan, that
offer 4-5 mmscmd potential.
On the financial health front, the company is reducing its debt year after
year and currently stands at 1.1x. Simultaneously interest coverage ratio is
also increasing and stands at 3.9x as of FY19. Currently, the stock trades at
13.9x EV/EBITDA and delivers 18.7% RoCE. Considering all the positing
operational factors, we recommend BUY on the stock.
BUY
CMP `286
0.7
Reuters Code
GGAS.BO
GUJGA IN
2
BSE Sensex
40,894
Nifty
11,993
Face Value (`)
Oil&Gas
Market Cap (` cr)
19,719
52 Week High / Low
314/116
Avg. Daily Volume
83,643
Jaikishan Parmar
022 – 3935 7600 Ext: 6810
jaikishan.parmar@angelbroking.com
Gujarat Gas Ltd
Others | Oil&Gas
Feb 18, 2020
2
Gujarat Gas Limited| Oil&Gas
2
Research Team Tel: 022 - 39357600 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Gujarat Gas
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)