Buy Gujarat State Petronet; target of Rs 300: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's research report on Gujarat State Petronet

Q3FY2021 operating profit/PAT at Rs. 398 crore/Rs. 248 crore exceeded estimates by 6%/9% led by 3.6% beat in gas transmission volume and lower-than-expected operating cost and depreciation. Volumes would be temporarily affected in Q4FY2021 (to decline 14% q-o-q to 33-34 mmscmd) due to lower offtake from refineries. Long-term outlook is intact led by regulatory push and unified tariffs. Spot LNG price has corrected to $6.5/mmBtu and would aid volume growth. Core pipeline business is effectively available free to investors as market value of GSPL’s investment in Gujarat Gas (after assuming 20% holding company discount) is close to GSPL’s current market capitalisation of Rs. 13,143 crore). Hence, we see deep value for investors in GSPL.

Outlook

We maintain our Buy rating on GSPL with an unchanged PT of Rs. 300 given strong earnings growth outlook, revival of capex plan (Rs. 500 crore for FY22) and management focus to become debt free.

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