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ICICI Securities Report
The oil and gas regulator Petroleum and Natural Gas Regulatory Board, in an order issued today, declared a revised tariff for Gujarat State Petronet Ltd.'s Gujarat gas grid, declaring an applicable tariff of just Rs 18.1/metric million British thermal unit (~Rs 0.7/standard cubic metre) versus Rs 50.8/ mmbtu asked for (Rs 1.7–1.8/scm, roughly what has been charged by the company over FY20–24, excluding ‘take or pay' charges).
This is a material negative surprise for the company, with most estimates (including ours) building in flattish tariffs over FY25–26E versus FY23–24 average in our base case estimates.
The regulator seems to have disagreed materially with the company on almost all tariff parameters, cutting assumptions on capex, opex and applicable volumes, driving the steep change. Downgrades to Sell with a revised target price of Rs 304 (earlier Rs 395).
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