ICICI Securities Reiterates Buy On 2 Mid & Large cap Oil & Gas Sector Stocks For Gains Up To 48%

Leading brokerage ICICI Securities reiterates buy on two leading Oil & Natural Gas sector stocks of the companies in its latest sector update report. These stocks are Gujarat State Petronet Limited (GSPL) & GAIL (India) Limited.

Brokerage's Views

The brokerage in the report has stated, a series of amendments have been made to pipeline tariff regulations by the Petroleum and Natural Gas Regulatory Board (PNGRB) last week, with changes made to volume, tax rate, opex, capacity etc. Both the listed gas transmission players GAIL and GSPL should largely benefit from these measures, in our view. 

It added, For GSPL, in particular, the amendments related to capacity expansion, tax rate, slower ramp up and SUG are welcome, given the apprehension investors have had for a long time on the extent of tariff cuts post FY23. With these amendments in place, GSPL can see as much as 11-12% increase in FY24E EPS, while for GAIL the impact would be <2% as per rough estimates. 

"We conservatively still build ~5% cut for tariffs for GSPL FY24E onwards (vs 11% earlier) while for GAIL we assume a smaller 2% increment vs previous estimates, raising our target price to Rs400/sh for GSPL (Rs383) and Rs137/sh for GAIL (Rs135). Reiterate BUY on both the stocks," the brokerage has said. 

 

Gujarat State Petronet Limited (GSPL)

Gujarat State Petronet (GSPL), incorporated in 1998, is an Oil & Gas sector mid-cap company. GSPL along with its subsidiaries is primarily engaged in the transmission of Natural gas through the pipeline. Further, it is engaged in the business of implementing and operating City Gas Distribution and generation of electricity through windmills. It has a market cap of Rs 15,504.53 crore. 

The brokerage with the given target price of Rs 400 per share reiterates buy call on GSPL for a potential upside of up to 44% from its current level. The stock is currently trading at Rs 279.15, 7.18% up from its previous close. It recorded its 52 week high at Rs 332.40 and 52 week low at Rs 209.45, respectively. 

The stock has delivered 15.77% positive returns in 1 week, whereas, in 1 month it delivered 25.67% positive returns. In 3 months, it gave 13.83% positive returns. In 1 year it fell by 12.05%. In 3 years it gave 27.15% positive returns on investment. It has given a maximum 32.2% positive returns in the past 5 years.

 

GAIL (India) Limited

GAIL (India) Ltd is a natural gas company. It is a Maharatna company under the Ministry of Petroleum & Natural Gas, Govt. Of India. GAIL integrates all aspects of the natural gas value chain including Exploration & Production Processing Transmission Distribution and Marketing and its related services. It is a large-cap company having a market cap of Rs 61,312.80 crore.

The brokerage sees 1 potential upside of up to 48% in the share price of the company with a target price of 137 per share. At the time of writing, the stock of the company is trading at Rs 93.15 per share, 1.14% up from its previous close. Its 52-week high is Rs 115.67 and its 52-week low is Rs 83, respectively.

The stock has delivered decent returns on investments over the years. In 1 and 3 months, it gave 7.97% and 5.67% positive returns, whereas, in 1 week, it gave 3.49% positive returns. In 3 years, it gave 14.8% positive returns. However, in 5 years, the stock has fallen, giving 20.67% negative returns.

Disclaimer

The stocks have been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.