Tariff case: GSPL surges 6% after appellate rules in favour

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26 Aug, 2025 12:21

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Shares in Gujarat State Petronet Ltd (GSPL) climbed about 6 percent to Rs 113 in early trade Thursday, a day after the Appellate Tribunal for Electricity overturned an order passed the Petroleum and Natural Gas Regulatory Board (PNGRB) in a case relating to tariff paid to the company for its high pressure gas grids.

Details of the order came out yesterday with the appellate reprimanding the regulator and asking it to revise the tariff upward after taking “factual considerations” in mind.

GSPL, a subsidiary of Gujarat state-owned Gujarat State Petroleum Corporation (GSPC), is responsible for building the infrastructure for transmission of natural gas that GSPC procures.

Analysts believe that after the Aptel order, the gas regulator is likely to revise tariff higher by about 10 percent and added the move would likely end the overhang related to tariff cuts for other gas network operators.

After the order, shares in other gas network operators, such as GAIL (up 0.6 percent), too rise, on hopes they may benefit from similar orders in future.

The regulator has highlighted that a 12 percent post-tax return on capital employed (RoCE) for gas network operators, as prescribed under existing regulations, was appropriate and should be adhered to while determining tariff, a note by brokerage firm Nomura said.

“With Aptel emphasising that a 12 percent post-tax RoCE is important and in the interest of all stakeholders, we think PNGRB will be forced to re-look at the entire tariff setting exercise, and will likely be more liberal,” Nomura analysts wrote. “We believe 10-15 percent tariff upsides are easily likely for both GAIL/GSPL.”

A 10 percent hike in tariff could raise GSPL’s FY16 earnings per share by 57 percent, a note by Edelweiss said. The brokerage has a price target of Rs 144 if such a scenario comes through, a potential upside of 66 percent from current levels.