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Systematix Research Report
Gujarat State Petronet Ltd.'s Q4 FY24 result was largely in line with our expectation where strong volume growth was offset by lower implied tariff. The company reported a strong volume growth of 33% YoY/15% QoQ to 33.4 million metric standard cubic metre per day led by a sharp uptick in volume offtake from refinery/petchem sector (+35% QoQ), power sector (+20%), and other industry (+23%).
City gas distribution saw an offtake growth of 5% QoQ to 11.4 mmscmd. However, due to recent tariff cut from PNGRB, the company’s implied tariff dipped to Rs 1.33/scm from earlier Rs 1.63/scm.
Consequently, revenue declined 9% to Rs 5.1 billion while Ebitda was flattish QoQ to Rs 3.8 billion, supported by a sharp decline in the gas transmission cost. Led by strong volume growth, we are raising our volume estimates by 6.5% for both FY25E/FY26E which led to a 11% increase in the Ebitda estimates.
We forecast Ebitda/profit after tax to see a decline of 34%/28% over FY24-FY26E led by recent tariff cut. On the back of higher Ebitda estimates, we are raising our SOTP-based target price to Rs 327, valuing its core business at Rs 130, its 54% stake in Gujarat Gas at Rs 181 (with 50% holding discount) and its investment in GIGL and Sabarmati Gas at Rs 17.
However, the stock has seen a sharp correction of 20% since our last report on the tariff cut. Therefore, we are upgrading the stock to Hold from Sell.
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Also Read: Gujarat Gas Q4 Review - Result Beats Estimates While Risk To Earning Persists: Systematix
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