Reliance Securities maintains buy on Gujarat Gas, target price Rs 330

Reliance Securities has maintained a buy rating on Gujarat Gas with a target price of Rs 330. The brokerage says while most oil & gas companies may witness earnings downgrade in the wake of COVID-19 pandemic, Gujarat Gas may be an exception on the back of: (1) fall in crude prices, which is likely to reduce cost of crude-linked LNG; (2) continued softness in spot LNG prices; (3) more orders for the ceramic players post slowdown in Chinese supplies; (4) management’s expectation of 10 per cent volume growth in FY21E; (5) Least vulnerability to open access policy if implemented. On Monday, the shares of the company traded at Rs 269.30, 4.14 per cent higher than its previous close of Rs 258.30 on Friday.

Gujarat Gas Ltd., incorporated in the year 2012, is a midcap company operating in oil and gas sector. As of now, the company has 380 operational CNG stations, which may touch 400 by the end of FY20 and the company is likely add 60-70 stations in FY21E. Gujarat Gas has also started commissioning new CNG station in geographical areas notified under 10th CGD round.