Nirmal Bang Upgrades To 'Buy' Rating On Gujarat Gas, Gujarat State Petronet After The Group Restructuring

Nirmal Bang Report

The boards of Gujarat PSU Gujarat State Petroleum Corporation (parent), Gujarat State Petronet Ltd. and Gujarat Gas Ltd. on Friday approved the scheme of arrangement and amalgamation (Scheme), as per GGL/GSPL’s filing on Friday evening.

This entails merging GSPC and GSPL into GGL, and then demerging the GSPL’s transmission assets into GSPL Transmission Ltd. focused on laying and operating natural gas pipelines.

The latter is to separate the gas trading and transmission activities as per regulations. We see GSPL as an immediate gainer, although some of this is priced in after the recent spurt; GGL is likely to be a long term gainer as the management expects the merger with GSPC to be earnings accretive.

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