MOSL: GUJARAT STATE PETRONET (Buy)-Volume recovery ahead of our estimate
GUJARAT STATE PETRONET: Volume recovery ahead of our estimate
(GUJS IN, Mkt Cap USD2.5b, CMP INR325, TP INR500, 54% Upside, Buy)
- GUJS reported a marginally higher (+5%) transmission volume than our estimate at 36.8mmscmd (+11% YoY and +9% QoQ), with implied tariff at INR1,282/mscm. Demand recovery from the refining/petchem segment offsets weak demand from CGDs, while demand from the Power sector recovered QoQ.
- Volumes in Jul’21 have recovered further to 39.4mmscmd. The management expects it to improve from here on as the demand from the CGD sector normalizes (after being impacted by the second COVID wave), along with increased flow of gas from RIL’s KG basin to customers in Gujarat.
- RIL has bought ~8mmscmd (4.8mmscmd/3.2mmscmd in auction II/III) of its own KG basin gas. Various companies (GSPC, Essar Steel, GSFC, etc.) have procured gas in the two auction rounds. We believe substantial volumes will flow to Gujarat, and thus on the pipeline of GUJS.
- The Mehsana-Bhatinda pipeline is now guided to be completed by FY22-end as the lockdowns and farmers protest continue to create hurdles in the completion of the same. We reiterate our belief that volumes for GUJS would jump to ~44mmscmd in FY23E as the company is also a beneficiary of: a) the upcoming LNG terminals in Gujarat, and b) increased demand due to focus on reducing industrial pollution (Gujarat has five geographical areas identified as severely/critically polluted), and c) commissioning of the Mehsana-Bhatinda pipeline.
Gujarat State Petronet Limited (GSPL) is a natural gas infrastructure and transmission company engaged in gas transportation business. The Company is engaged in transmission of natural gas through pipelines on an open access basis from supply points to demand centers. It also generates electricity through windmills. Its segments include Gas Transportation and Windmill. It develops energy transportation infrastructure and connects natural gas supply sources, including liquefied natural gas (LNG) terminals to various markets. It has set up a 52.5 megawatt (MW) Wind Power Project at Maliya Miyana (District-Rajkot), Gorsar, and Adodar (District-Porbandar). Its subsidiaries include GSPL India Gasnet Limited, which is engaged in development of Mehsana-Bhatinda and Bhatinda-Jammu-Srinagar pipeline projects, and GSPL India Transco Limited, which is engaged in the development of Mallavaram-Bhopal-Bhilwara-Vijaipur Pipeline Project. It serves various industries, such as power and fertilizer.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.