Buy Gujarat State Petronet; target of Rs 392: Prabhudas Lilladher

Prabhudas Lilladher's research report on Gujarat State Petronet

PNGRB, in its tariff order, revised GSPL’s HP Gas Grid tariff to Rs18.1/mmBtu wef from 1st May,2024, a sharp cut of 46.7% against the existing tariff of Rs34/mmBtu. GSPL had proposed the tariff to be revised to Rs50.77/mmBtu. Out of the current volume of 29mmscmd, ~24-25mmscmd would be through HP Gas Grid and we believe this would result in ~30% cut in EPS forecasts for FY25/26E. Going ahead, we estimate transmission volume of 35mmscmd for FY25/26E with a tariff of Rs1,088/mscm.

Outlook

We upgrade our rating from ‘Accumulate’ to ‘Buy’ as no further negatives are expected in the stock, with a TP of Rs392 based on 10x FY26 adj EPS of ~Rs12 and adding the value of its stake in Gujarat Gas and Sabarmati Gas at 25% holding company discount.