Gujarat State Petronet Q2 Results Review - Higher Tariff Fueled Growth: Systematix

Systematix Research Report

Gujarat State Petronet Ltd.’s Ebitda/profit after tax was 13%/26% ahead of our expectations on the back of better than better-than-expected implied tariff, partially offset by lower-than-expected volume.

Total transmission volume increased marginally 2.8% QoQ to 30.2 million metric standard cubic metre per day led by sharp offtake from the power sector which grew to 5.1 mmscmd from 1.7 mmscmd.

Though offtake from the refinery sector decline 39% to 5.5 mmscmd, fertiliser and other sector saw a marginal uptick in offtake during the quarter. Implied tariff rose 11% QoQ to Rs 1.6/standard cubic metre which led to a strong 22% QoQ growth at Ebitda to Rs 4.1 billion.

Further, other income increased sharply to Rs 2.7 billion in Q2 FY24 versus Rs 1 billion YoY due to higher dividends from Gujarat Gas owing to the new dividend policy by the Gujarat government.

Also, lower effective tax rate led to a 132% QoQ (69% YoY) growth at PAT to Rs 5.3 billion. We raised our target price upwards on better tariff and higher dividend income which led to an increase in our target price to Rs 316 from Rs 306.

Due to the 16% upside from the current level, we upgrade the stock to 'Buy' from 'Hold'.

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