Gujarat State Petronet Gets ‘Add’ Upgrade Post Q1 Results: What It Means for Investors
Gujarat State Petronet Ltd. has reported a significant rise in transmission volume QoQ, led primarily by the power sector, ref/petrochem, and others. The implied tariff stood at Rs 863/mscm compared to Rs 847/mscm in the previous quarter.
Key Highlights of Q1 Results
- Transmission volume rose from 25.8 mmscmd to 29.65 mmscmd QoQ
- Implied tariff stood at Rs 863/mscm compared to Rs 847/mscm in the previous quarter
- Opex per mscm declined from Rs 332 to Rs 149
- Ebitda grew 62% QoQ to Rs 2 billion
- PAT came in at Rs 1.4 billion
What Does This Mean for Investors?
The ‘Add’ upgrade from PL Capital is a significant development for investors. The brokerage estimates that transmission volume will rise from 30.2mmscmd in FY25 to 33mmscmd in FY26 and then to 37mmscmd in FY27, driven by growth in CGDs, ref/Petrochem.
Target Price and Valuation
The stock is currently trading at 20.6x FY26 EPS. The brokerage has valued the core business at 10x FY27E adj EPS at Rs 118 and investments in Gujarat Gas (54.2% stake) and Sabarmati Gas (27.5% stake) at a 25% holding discount, providing a valuation of Rs 230. This leads to a target price of Rs 348.
Insights and Analysis
LNG prices are expected to decline in the longer run with the addition of capacities globally. As a result, transmission volumes are likely to rise. This is a positive development for Gujarat State Petronet Ltd. and its investors.
Investment Advice
Investors should consult an expert based on their individual needs before making any investment decisions. The views expressed in this article are that of the author entity and do not represent the views of any other party.
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