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HDFC Securities Institutional Equities
Our 'Add' recommendation on Gujarat Gas Ltd., with a price target of Rs 453, is premised on-
volume growth of only ~9% compound annual growth rate over FY24-26E compared to ~18% volume growth seen over FY19-22;
increased pricing competition from alternate fuel in the industrial/commercial segment; and
low visibility on spot liquefied natural gas prices in the medium term.
Gujarat Gas' Q2 FY24 Ebitda/profit after tax at Rs 5/3 billion came in above our estimates, owing to a higher-than-expected per unit Ebitda margin and volume.
Volume stood at 9.32 million metric standard cubic metre per day (22% YoY, +1% QoQ).
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