Gujarat State Petronet - New Tariff Order Led To A Sharp Earnings Cut; Downgrade To Sell: Systematix

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Petroleum and Natural Gas Regulatory Board came out with a new tariff order for the Gujarat State Petronet Ltd.’s high-pressure pipeline which has seen a massive cut of 46.8% from the current tariff to Rs 18.1/metric million British thermal unit (Gujarat State Petronet’s expectation of Rs 50.8/mmbtu). New tariff has seen a two-year delay and would be effective from May 01, 2024. 47% tariff cut was significantly below our earlier expectation of ~15%-20% cut which was largely attributed to higher future volume assumptions. However, due to significant delay in new tariff order we were modeling flattish tariff earlier. Therefore, led by new tariff order we cut our Ebitda estimates by 43%/47% from our earlier assumption and now forecast average tariff of Rs 29.5/28 per mmbtu for FY25E/FY26E. We continue to forecast a volume of 31/32.6 million metric standard cubic metre per day for FY25E/FY26E rising from 29.5 mmscmd in FY24E. We, therefore, cut our target price to Rs 309/share from earlier Rs 350/share (Rs 181 for it’s 54.2% stake in Gujarat Gas at 50% holding discount at current price, Rs 105/share at eight times to FY26E core earnings and Rs 24 to its value in GIGL, GITL and Sabarmati Gas). We downgrade the stock to Sell from earlier Hold. However, the company may challenge the order which could further delay the actual tariff cut..Click on the attachment to read the full report:.Hindustan Zinc Q4 Results Review - Inline; Cost Of Production To Remain Under Control: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Gujarat State Petronet - New Tariff Order Led To A Sharp Earnings Cut; Downgrade To Sell: Systematix

47% cut in tariff cut - much sharper to our expectation

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Gujarat State Petronet - New Tariff Order Led To A Sharp Earnings Cut; Downgrade To Sell: Systematix

47% cut in tariff cut - much sharper to our expectation

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