BRI: Gas Utilities - Navigating the CGD wave, Initiating on Guj Gas with BUY; IGL top pick, MGL UNPF

Best Research Ideas

Gas Utilities - Navigating the CGD wave, Initiating on Guj Gas with BUY; IGL top pick, MGL UNPF

— Pratik Chaudhuri, Jefferies Asia Equity Research – Energy

We initiate on Guj Gas, assume coverage on IGL/MGL and evaluate the key themes affecting the CGD sector. IGL is our top pick where a 13% volume growth (aided by policy support) may drive a 16% CAGR in EPS (FY18-23E). We also like Guj Gas due to an expected recovery in margins and robust volume growth. We rate MGL as UNPF where we expect a mid single digit EPS growth capped by infra constraints rendering current valuations at 15x FY20E P/E unattractive. FULL REPORT