Gujarat Gas Company Ltd
CMP - 454 Target - 575
Investment Rationale
~ Optimum sales mix
~ Lower debt on books
~ Robust financial performance
~ 65% promoter holding shows promoters' confidence in the company's growth.
~ A consistent dividend player
~ Growth strategy
~ Improving industry outlook
Valuations
With looking at the performance of the company natural gas being of the fastest growing energy market which is expected to touch 23% of the primary energy basket by 2020 (currently 11%) suggest a significant growth in the sectors and the company as well. At CMP the company trades 18.52x FY11E earnings and 16.72x FY12E earnings. The stock looks good for the target price of 575 for next 12 months time horizon.
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