ICICI Securities Upgrades Rating To Buy On Midcap Gas Distribution Stock, Sees 21% Gains

Broking firm ICICI Securities has come up with a "Buy" recommendation of Gujarat Gas Ltd. (GGL) for a target price of Rs 565 apiece. The broking firm claims a potential upside of 21% from its current level.

GGL is a midcap City Gas Distribution (CGD) having a market capitalisation of Rs. 32,199.45 crore. It is India's largest City CGD Company in terms of sales volume operating in 44 districts in 6 states of Gujarat.

Current Market Price, & 52-Week High/Low

On Friday, the stock last traded at Rs 467.75 apiece, 2.92% up from its previous close of Rs. 454.50 apiece. The stock recorded its 52-week high on 18 May 2022 at Rs. 583.75 apiece and 52-week low on 23 June 2022 at Rs. 403.55 apiece, respectively.

Returns Over The Past 5 Years

The stock surged 0.25% in the past 1 week and declined 0.55% in the past 1 month. It has given 8.66% negative return in the past 1 year. It has given 85.43% positive return in the past 3 years and 164.49% in the past 5 years, respectively.

Upgrade to BUY

ICICI Securities said, "Our sense is that FY24 will again be a year of two distinct halves in terms of finances. GGL would see stronger operational and financial metrics in H1 while H2 would be a more modest period owing to a stronger spot LNG pricing environment. For the overall year, while volume growth may remain modest, we see margins growing more strongly than expected, due to the twin impact of lower domestic costs and moderate spot LNG prices helping offset a softer price environment at Morbi owing to the challenge of soft propane prices."

It added, "With the recent Gujarat government order implying a near-doubling of dividend payout and a strong probability of buyback as well, prospects of good returns from the GGL stock appear stronger. At our revised estimates, a multiple of 16.9x FY25E EPS is attractive, driving our upgrade to BUY."

Disclaimer - The stock has 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 consult with certified experts before making any investment decision.