Target: ₹360

CMP: ₹296.10

Gujarat State Petronet (GSPL) is well-paced to witness volume recovery, led by LNG prices having moderated to less than USD15/mmbtu, while the much-awaited tariff revision of its high-pressure (HP) grid would lead to better earnings visibility.

Management had guided towards a rising capex trend, with FY24 capex target of ₹700 crore (vs. ₹100-200 crore pa in the last 5 years). PNGRB’s decision is expected soon.

We estimate revised tariff to be better than expected, on the back of renewed capex focus and taking cues from the recent tariff order of its low-pressure (LP) grid.

We reiterate BUY on GSPL; we keep our estimates and TP of ₹360/share unchanged, but there is an upside risk based on the tariff event. While we maintain a neutral and cautious view on Gujarat Gas, the recent hike in propane import duty would grant protection from further downsides.

GSPL’s impending tariff review is key to medium-term earnings visibility, as the stock continues to trade at attractive valuations. Main risks: Adverse oil-gas prices/demand, industrial slowdown, cost overruns, project delays and regulatory overhangs.