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JMFL
GSPL (Buy)
CMP: ₹174.95
Target: ₹250
Petroleum and Natural Gas Regulatory Board (PNGRB) has approved a revised tariff for both high pressure (HP) and low pressure (LP) gas transportation pipelines of Gujarat State Petronet Ltd (GSPL). For the HP gas grid, the tariff has been revised by 11 per cent for the period up to FY18. Additionally, from FY19, the tariff has been increased by 42 per cent.
We note that the 11 per cent tariff hike till FY18 will likely have to be recovered in future. Hence, the revised tariff from FY19 maybe higher than the 42 per cent. GSPL will have to now apportion this tariff into zonal tariff and seek PNGRB’s approval for the zonal tariff and hence, implementation may take some time.
Similarly, LP tariff has) tariff of ₹1.1-1.15/scm, which if revised to ₹1.3/scm after zonal apportionment, can been increased by 117 per cent from FY19 onwards. Currently, we build-in a blended (HP+LP increase the TP to ₹250 from current ₹215.
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