Comments
Reliance Securities
Gujarat State Petronet (Buy)
CMP: ₹198.95
Target: ₹296
Key takeaways: a) Gas-based power plants to drive gas transmission volume, which will translate into 7-12 per cent growth in Gujarat State Petronet Ltd (GSPL) FY21-FY23E EPS; b) Fertiliser plant and GSPC’s cargoes to drive 10 per cent volume growth; c) New pipeline to evacuate LNG from upcoming terminals in Gujarat; d) Petcoke Gasifier – Not a Threat to GUJS’ volume; e) As gas power plants continue to remain the main driver of transmission volume of GSPL, we expect its gas transmission volume to grow by 3-5 mmscmd in the next 2-3 years; f) Aided by lower LNG prices, the gas-based power plans are expected to consume 3-5 mmscmd more in the next 2-3 years, which will lead to 8-12 per cent upside in GSPL’s transmission volume and translate into 7 per cent/11 per cent/12 per cent growth in FY21E/FY22E/FY23E EPS, respectively.
Outlook & valuation: We expect GSPL’s transmission volume to clock 8.3 per cent CAGR, while its revenue and earnings to witness 12 per cent and 14 per cent CAGR, respectively, over FY19-23E. As the outlook on spot LNG prices is subdued, we believe it may lead to positive surprises on volume growth front and thereby support GSPL’s core transmission earnings. Further, the earnings growth of its CGD subsidiary will get a boost, as 75-80 per cent of its volume comes from the industrial customers, whose gas requirements are met through LNG sourcing.
.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.