Gujarat Gas, Gujarat State Petroleum Corp., GSPL Merger – A New Behemoth Emerges: ICICI Securities

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-

1. integrates gas sourcing, gas trading and gas distribution under Gujarat Gas,

2. creates an independent gas transmission entity,

3. adds meaningful cash into Gujarat Gas, reduces sourcing costs and

4. 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.

Click on the attachment to read the full report:

DISCLAIMER

This 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.