Hold Gujarat State Petronet: target of Rs 350: ICICI Securities

ICICI Securities's research report on Gujarat State Petronet

Gujarat State Petronet (GSPL) reported a 49%/48% YoY decline in EBITDA/PAT to INR 1.9/INR 1.36bn with EBITDA/PAT below our estimate of INR 2.1bn /INR 1.4bn. Transmission volumes of 29mmscmd declined 2% QoQ (flattish YoY) driven by 1.1/1.8mmscmd YoY/QoQ dip in power sector demand to 1.3mmscmd for the quarter. Prospects for FY25–27E remain uncertain, with a sharp ~47% cut in tariffs from FY25E, as per PNGRB’s order in Q1FY25.

Outlook

We revise our FY25–27E EPS by 7.3%/19.5%/21.4% to factor in lower volumes for GSPL and weaker outlook of its subsidiary GUJGA. Long-term view on GSPL is a moot point with the imminent merger of the company with Gujarat Gas (see report here). Having said that, the derived TP, based on DCF and a revised Gujarat Gas fair value, is at INR 350, implying 5% upside. Reiterate HOLD.