BQ Blue's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages. These reports offer BloombergQuint's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
HDFC Securities Report
A sharp increase in domestic gas supply growth, from no growth over FY17– FY20 to a 12% compound annual growth rate (CAGR) over FY21–FY24E, and the uneven impact of Covid-19 on various gas consumers should shuffle the deck in the gas utilities sector.
Coupled with global excess supply (over demand) keeping liquefied natural gas prices competitive, this should benefit Indian gas utilities.
We expect supply and (low) price led 9.8% CAGR in Indian natural gas demand over FY21–24E to drive earnings growth of 42-45% (FY21–FY23E) as well as stock price upside potential of over 19-27% for our top picks GAIL India Ltd., Gujarat State Petronet Ltd. (GSPL) and Petronet LNG Ltd.
Rising capacity utilisation should drive growth for these stocks, which currently trade at compelling valuations. On FY22E, GAIL, GSPL and Petronet LNG are trading at a price to earning of 6.4-11.9 times, a 17-39% discount to their five-year average.
By FY22E, operating cash flows should improve by up to 21% YoY, and free cash flow yield should increase up to 1,020 basis points YoY for these three companies.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
