Gujarat State Petronet Q3 Results Review - Lower Volumes Offset By Higher Realisation: Motilal Oswal

Motilal Oswal Report

Gujarat State Petronet Ltd.’s Q3 FY24 Ebitda was in line with our estimate at Rs 3.8 billion, led by higher realisation of Rs 1,628/million metric standard cubic metre. Ebitdam was 110 basis points lower than our estimate at 83.3%. Volumes were lower than our estimate at 29 mmscmd due to lower offtake by the power sector.

The management highlighted that there has been an increase in high pressure volumes, which led to better realization. Low pressure volumes declined during the quarter. Incremental revenue from the ~3 mmscmd Mehsana-Bhatinda pipeline contributed to realization improvement.

Spot LNG price is currently at ~$9.5/metric million British thermal unit versus ~$15.8/mmBtu in Q3 FY24, which bodes well for volumes of the company.

Gujarat State Petronet’s HP gas grid is also up for a tariff revision and might benefit from the tariff reforms announced last year. The proposed capex for the HP gas grid stands at Rs 45.4 billion for up to FY32, which would facilitate gas transportation from new LNG terminals and obviate the need for a tariff cut.

We have not changed our estimates as of now, as the Q3 performance was largely in line with our estimates. The stock is trading at a price/earning of ~20 times FY25E EPS of Rs 19 and EV/Ebitda of ~13 times. We maintain our 'Buy' rating with a target price of Rs 450.

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