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Centrum Broking
GSPL (Buy)
Target: ₹260
CMP: ₹211.25
Gujarat State Petronet (GSPL) reported volumes of 33.3 mmscmd beat our expectation of 32.5 mmscmd. However, they declined 13 per cent (y-o-y) and 10 per cent (q-o-q), impacted due to Covid-19 lockdown.
Our volume estimates factor in 36.3/37.3 mmscmd for FY21/22E, even after building in loss of volumes from RIL at 3-4 mmscmd, which is likely to be offset by expectation of higher offtake from CGD and other segments.
While offtake from CGD/fertiliser/refining/petchem/others segments remained weak, offtake from power grew sharply offsetting this weakness to some extent. Resultant, reported EBITDA and PAT of ₹350 crore and ₹200 crore respectively, beat our expectation of ₹300 crore and ₹160 crore.
Gross transmission tariffs of ₹1.5/scm grew 5 per cent y-o-y, adjusted for transmission expenses, net tariffs translate to ₹1.3/scm (flat y-o-y), was in line. With a recovery in volumes expected over H2-FY21 and strong tariffs, we remain positive on earnings prospects over FY20-22, with the value boost from subsidiary Gujarat Gas an important support to overall value.
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