Sharekhan's research report on Gujarat State Petronet
Q1FY24 PAT of Rs. 229 crore (up 2.2% q-o-q) was 12% above our estimate led by beat in volume/margin and significantly higher other income. Gas transmission volume growth of 17% to 29 mmscmd was marginally better-than-expected while EBITDA margin of Rs. 1.3/scm was 4% above estimate led by lower-than-expected decline in tariff and lower operating cost. Soft spot LNG price of $10-11/mmBtu would accelerate volume recovery and PNGRB amendments to natural gas pipeline tariff would allay concerns on steep tariff cuts of 15-20%. We expect 16%/13% EBITDA/PAT CAGR over FY23-25E.
Outlook
We maintain a Buy on GSPL with an unchanged PT of Rs. 342 as core pipeline business is available at only 1.7x FY25E EPS and volume recovery for subsidiary Gujarat Gas led by favourable economics of I-PNG versus propane. Gujarat state government’s recent policies on dividend distribution and share buyback would improve shareholder returns.
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