Prabhudas Lilladher's research report on Gujarat State Petronet
Gujarat State Petronet (GSPL) reported a rise in transmission volume QoQ from 25.8mmscmd to 29.65mmscmd during the quarter QoQ led primarily by power sector, ref/petrochem and others. Implied tariff stood at Rs863/mscm compared with Rs847/mscm in the previous quarter. Opex per mscm declined from Rs332 to Rs149. As a result of higher volume QoQ and lower opex, EBITDA grew a sharp 62% QoQ to Rs2bn (Ple Rs1.5bn, BBGe Rs1.6bn). PAT came in at Rs1.4bn (Ple Rs1.2bn, BBGe Rs1.1bn). The stock is currently trading at 20.6x FY26 EPS.
Outlook
We upgrade the stock to ‘Accumulate’, primarily on account of recent decline in the stock. Investments in Gujarat Gas (54.2% stake) and Sabarmati Gas (27.5% stake) at a 25% holding discount provide a valuation of Rs230, and valuing the core business at 10x FY27E adj EPS at Rs118, we arrive at a TP of Rs348 (unchanged).
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