Hold Gujarat State Petronet; target of Rs 348: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Gujarat State Petronet

Gujarat State Petronet (GSPL) reported a sharp decline in transmission volume both YoY and QoQ led by liquid fuels being cheaper than gas and shutdown of few fertilizer plants during the quarter. Implied tariff is not comparable YoY due to downward revision. Sequentially, implied tariff stood at Rs847/mscm, -3% QoQ. Lower volume and lower implied tariff resulted in EBITDA of Rs1.2bn, -35% QoQ (PLe & consensus Rs1.9bn). Higher interest cost resulted in even sharper decline of 48% in PAT to Rs0.7bn (PLe and consensus Rs1.3bn).

Outlook

The stock is currently trading at 22x FY26 EPS. Maintain ‘HOLD’ rating with a TP of Rs348. 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 8x FY27E adj EPS at Rs118, we arrive at a TP of Rs348.

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Gujarat State Petronet - 27052025 - prabhu