Gujarat State Petronet Q1 Results Review - Compelling Valuation With Robust Long-Term Prospects: Dolat Capital

Dolat Capital Report

Gujarat State Petronet Ltd.'s revenue Rs 4.4 billion (-8% YoY), 3% below our estimates. Revenue growth impacted due to 8% YoY fall in blended tariff.

The company posted 17% QoQ jump in volume on the back of improved consumption by power, city gas distribution, and other small industries on the soft liquefied natural gas prices.

Power sector gas consumption jumped 131% YoY and 223% QoQ on account of 36% fall in spot LNG prices.

Ebitda Rs 3.4 billion (-7% YoY, +14% QoQ), 10% above estimates. Ebitda growth backed by 44% decline in gas transportation costs. Profit after tax Rs 2.3 billion (-3% YoY, +2% QoQ), 1% above our estimates.

For Gujarat State Petronet, the upcoming tariff review is crucial, as it would give medium‐term earnings visibility vs the ongoing uncertainty that has created an overhang on the stock despite attractive valuations.

While valuing Gujarat State Petronet, we have assigned ~50% holding company discount, even adjusted to which the stock is trading at just seven times of FY25E price/earning.

Hence, we maintain 'Accumulate' with a revised target price of Rs 325 (versus earlier Rs 335).

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