Buy Gujarat State Petronet; target of Rs 200: Edelweiss

Edelweiss' research report on Gujarat State Petronet

Gujarat State Petronet’s (GSPL) Q4FY17 performance was subdued with EBITDA at INR 2bn falling 2% YoY and 12% QoQ (8% below estimate). The miss was led by 6% volume dip to 23.4mmscmd, while tariff at INR 1.1/scm came in line. Volumes fell 11% QoQ due to limited spot LNG volumes at Petronet’s (PLNG) Dahej terminal and lower LNG demand amidst sharp spurt in prices.

Outlook

We estimate 12% tariff hike in FY19. We estimate 6% volume CAGR over FY17-19 owing to higher demand from city gas on improving gas economics, incremental PLNG capacity and commissioning of Mundra LNG terminal. Maintain ‘BUY’ with INR 200 target price.