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Thursday, November 3, 2011

Eastern Gases Ltd:-Buy/sell/growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:Eastern Gases Ltd

Story:Reduction in the subsidy on LPG and rationing of the subsidized LPG Cylinders for consumers will be a reality in near future.Talk on this subject is already on and it may take shape eventually.Who will benefit from such a scenario - no doubt it is private LPG distributors. When the difference of the cost of LPG cylinders distributed by PSU's and private players become nil or negligible Private LPG distributors will get a chance to compete with PSU's and increase their market share. When we look into the investment angle of this possible changes , we have not much choices left .Only very few private LPG distributors are available in listed space. EASTERN GAS - is one such company from Kolkatta which is not very popular for investor fraternity till now.Eastern gas is currently concentrating in distributing commercial Cylinder under the brand name ' EAST GAS' in Kolkata and nearby areas. It is distributing LPG in 17 and 33 kg commercial cylinders .Since the subsidy is very huge for non commercial cylinders, at present it is not viable to distribute home cylinders in a big way .But the situation will change when there is a reduction in subsidy as mentioned above. Company having a 30,000 MT / month LPG refilling plant at Durpagur.Eastern Gas also having a marketing agreement with Indian Oil Petronas Private Limited. Company is also in Auto LPG Segment and planning to start 100 auto LPG filling stations in few years.It also having plans to start joint ventures for city gas distribution . All together , policy changes in this sector is expected to change in favor of Private LPG distributors. Number of listed companies from this space is very few . Hence , once there is some clarity emerges in this sector, first comers with necessary infrastructure will benefit a lot and in such a situation Easter Gas may turn as a dark horse .For the last financial year Eastern Gas posted a turnover of Rs.90 Cr v/s Rs.63 Cr and a net profit of Rs.1 Cr v/s 63 Lac. At CMP of Rs.18/ - nothing to loose .

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