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Anand Rathi Report
GAIL India Ltd. had recently proposed an integrated tariff encompassing most key gas-transmission pipelines in its network. The Petroleum and Natural Gas Regulatory Board has allowed a tariff Rs 58.61/metric million British thermal unit versus the FY22 blended tariff of Rs 44.2.
We note that the near-term outlook for gas transmission, trading and petchem have improved following the fall in spot LNG prices. Such lower prices could drive higher gas transmission and trading volumes and lead to lower operating costs. The gas transmission business for FY25 now accounts for ~60% of the sum-of-parts, offering greater earnings assurance.
Risks:
Changes in government regulation policies, smaller natural gas transmission tariff hike, steep movements in LNG, crude and PE prices, slower execution of pipeline expansion plans, slowdown of demand and high capex spends not resulting in good returns.
Gujarat State Petronet Ltd. is a pure transmission play in western India. It is expecting a hike in transmission tariffs with PNGRB yet to come out with a document. The near-term outlook for gas transmission would be driven by more volumes across sectors due to falling gas prices. Debt has decreased drastically, making the company net cash.
Risks:
Changes in government regulation policies, smaller hike in natural gas transmission tariffs, steep movement in LNG and crude prices, slower execution of pipeline expansion plans, slowdown of demand and high capex spends not resulting in good returns.
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