1
Please refer to important disclosures at the end of this report
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1
Gujarat State Petronet Limited (GSPL) is a natural gas infrastructure and
transmission company engaged in gas transportation business. The Company is
engaged in transmission of natural gas through pipelines on an open access
basis from supply points to demand centers. It also generates electricity through
windmills. In the immediate future key positive are softening of LNG prices,
recent rupee appreciation, and possibility of ban on use of polluting fuels like
furnace oil and pet coke. In the medium to long term, earnings are expected to
improve due to upward pipeline tariff revision and higher natural gas
transmission. GSPL's management is optimistic about tariff hike by Petroleum and
Natural Gas Regulatory Board (PNGRB) and expects the same to happen in
CY17. Additionally, rising city gas distribution growth opportunities, potential
shift to natural gas due to environmental/pollution norms (industrial / CNG) and
volumes from Mundra LNG terminal (FY18 onwards) adds support to long term
volumes. Going forward, the company is expected to report higher volumes as
incremental demand comes from existing players will start to show in the
numbers. Also fall in import duty of LNG will boost demand. Government is
encouraging the use of LNG/natural gas in the country and it is poised to benefit
from it. Increasing volumes backed by increase in demand coupled with tariff
revision from PNGRB will increase profitability of the company. The company has
reported a healthy return on equity of 12.4% over the last 3 years. The company
has been reporting healthy cash flow from operation of above `600cr from FY13
to FY16 which is positive for the company going ahead. Hence Buy.
BUY
CMP `172
0.7
Reuters Code
GSPT.BO
10
BSE Sensex
30,302
Nifty
9,361
Face Value (`)
Gas Distribution
Market Cap (` cr)
9,685
52 Week High / Low
204/119
Avg. Daily Volume
60,708
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Gujarat State Petronet
Others | Gas Distribution
May 25, 2017
2
Gujarat State Petronet | Gas Distribution
May 25, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Gujarat State Petronet
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)