Centrum's research report on GSPL
Additionally, in a scenario of zero tariff hike, our TP will decline to Rs 165 and hence the downside is capped. This apart, the long term valuation upside from investments in cross country pipelines and the city gas distribution business offer a margin of safety as well and hence the risk-reward looks favourable.
Outlook
We retain our BUY rating on Gujarat State Petronet Ltd. (GSPL) with a revised TP of Rs 185 (earlier TP Rs 180). Volumes improved sequentially to a commendable 26.2MMSCMD. We reiterate that the current regulatory regime is less harsh and we believe it can modestly get 10% incremental tariff noting the recent positive tariff orders pronounced for GAIL and that in the pre-regulatory regime, it charged a weighted average tariff of Rs 27.41/MMBTU (including SuG) vs the current tariff of Rs 26.58 (excluding SuG).
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