Gujarat State Petronet share price was locked at 20% lower circuit on Monday after Petroleum and Natural Gas Regulatory Board (PNGRB) cut the pressure transmission tariff on the company’s Gujarat pipeline network by 47%.
The regulatory board’s tariff order outlines the prices that the company can charge for transporting natural gas through its pipeline network.
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Emkay Global keeps its volume and capex-opex estimates unchanged, but cuts Gujarat State Petronet share price target to ₹370 per share.
At 9:35 am, Gujarat State Petronet shares were down 20% at ₹302.30 apiece on the BSE.
Gujarat State Petronet share price was locked at 20% lower circuit on Monday after Petroleum and Natural Gas Regulatory Board (PNGRB) cut the pressure transmission tariff on the company’s Gujarat pipeline network by 47%.
The PNGRB’s tariff order for the company’s high-pressure gas grid came as a huge negative surprise, as the regulated tariff was set 47% lower from ₹34 per million metric British thermal unit (mmbtu), at ₹18.1 per mmbtu, and was a far call from the ₹50.8 sought by Gujarat State Petronet (GSPL).
The regulatory board’s tariff order outlines the prices that the company can charge for transporting natural gas through its pipeline network.
The 3-year delay caused a ₹11.1/mmbtu impact from prospective implementation with higher past volumes and economic life extension also playing a part, analysts said.
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“Inordinate delays in pipeline tariff revision and the long-term nature of the pipeline tariff model, with multitude of assumptions and subjectivity, has weakened GSPL’s outlook despite sectoral tailwinds like higher gas supplies, rise in demand and lower LNG prices. The volume-tariff trade-off, potential lack of major expansion options in Gujarat, and the last 5 years being high on volume and low on capex also keep the future tariff estimates cloudy," said Sabri Hazarika, Senior Research Analyst at Emkay Global Financial Services.
The analyst believes only respite would be higher capex and GSPL aggressively pursuing capacity expansion with some leverage.
The effective tariff cut versus the FY19 blended book rate is ~37% versus the brokerage firm’s earlier assumption of 20%. FY25E and FY26E EPS is hence down 16% and 21%.
Emkay Global keeps its volume and capex-opex estimates unchanged, but cuts Gujarat State Petronet share price target to ₹370 per share.
At 9:35 am, Gujarat State Petronet shares were down 20% at ₹302.30 apiece on the BSE.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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