Gujarat State Petronet - Company Update - ICICI Securities

Gujarat State Petronet's (GSPL operating revenue for Q4FY20 increased sharply by 37.2% YoY to Rs. 595.2 crore on account of growth in transmission volumes. Transmission volumes increased 13.5% YoY to 36.8 mmscmd. EBITDA came in at Rs. 355.7 crore, up 8% YoY. Subsequently, PAT was at Rs. 225.6 crore, up 47.1% YoY, aided by a lower tax rate.

Valuation & Outlook

In Q1FY21E, GSPL's transmission volumes are expected to decline as the extended lockdown led to lower CNG & industrial PNG demand from Gujarat. However, in the long run, the transmission business is expected to report stable volumes, adjusting for lower refinery volumes, in the backdrop of growth in CGD & PNG sectors and increased LNG capacity in Gujarat. The management indicated at capacity expansion due to new LNG terminals and to support pipelines of its subsidiaries for expansion outside Gujarat. However, expected downward revision of transmission tariffs will have an impact on profitability of the company from H2FY21E. Also, nearly 50% of GSPL value is derived from its listed CGD entity Gujarat Gas (54.1% stake) and unlisted Sabarmati Gas, which commands holding company discount. Hence, investors should prefer directly investing in Gujarat Gas instead of GSPL. We value GSPL on an SOTP basis with investments at ~Rs. 127/share and standalone business at ~Rs. 123/share to arrive at a target price of Rs. 250. We downgrade the stock from BUY to HOLD recommendation.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GSPL_CoUpdate_Jun20.pdf

Shares of GUJARAT STATE PETRONET LTD. was last trading in BSE at Rs.225 as compared to the previous close of Rs. 223.25. The total number of shares traded during the day was 576175 in over 1082 trades.

The stock hit an intraday high of Rs. 228.7 and intraday low of 221.7. The net turnover during the day was Rs. 129390577.

Source : Equity Bulls

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