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ICICI Securities Report
The Gujarat State Petroleum Corp. group made a merger announcement (link here and here) of GSPC, Gujarat State Petronet Ltd. and Gujarat Gas Ltd. into one entity (erstwhile Gujarat Gas) and thereafter a carve out of the transmission business into a separate entity – GSPL Transmission Ltd.
At one stroke, this move-
integrates gas sourcing, gas trading and gas distribution under Gujarat Gas,
creates an independent gas transmission entity,
adds meaningful cash into Gujarat Gas, reduces sourcing costs and
helps utilise the cumulative tax loss of Rs 72 billion (in Gujarat State Petroleum Corp.) through higher profitability of the consolidated entity.
Gains in GSPL have already started reflecting the declared swap ratio, but EPS accretion and strategic benefits for Gujarat Gas will only gradually reflect in the stock. Raise GSPL to Hold and Gujarat Gas to Buy.
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