Gujarat State Petronet Ltd Stock Quotes and Charts
The spotlight in the Indian Oil and Gas Sector in the medium term will be on the supply-led surge in natural gas demand and the companies benefiting from it. Amongst the sector, the key beneficiaries will be concerns with high operating leverage, better project execution track record and limited potential downside from possible adverse regulatory development.<br> <br>Against the above backdrop Gujarat Petronet (GSPL) is a top pick on 1. High Operating Leverage in the High Gas Demand state of Gujarat&&; 2. Strong CAPEX plans with good project execution track record, and 3. Visibility on long-term gas supplies.<br> <br>The market which seems to be struggling to stay away the 19000 Sensex level, is not fully pricing in the sustained volume growth potential of GSPLs core transmission business, which runs on the Panna-Mukta-Tapti (PMT gas fields) at present, but which will see addition of the Reliance KG gas in six months from now, and two more surges from the Gujarat Petroleum KG fields in 2010 and ONGCs KG fields in 2012.<br> <br>Key Catalysts:<br> <br>The key stock performance triggers include:1. Commencement of additional supply of 4.8 mmscmd of gas from the PMT fields in April 2008&&; 2. Steady progress in pipeline expansion plans which will go up from 1100 kms at present to roughly 2200 to 2400 kms in 3 years from now&&; 3. Commencement of RILs gas production in second half FY09&&; 4. Further clarity on Gujarat State Petroleum Corporations (GSPC) gas production from the KG basin&&; 5. Successful execution of city gas projects by the GSPC group.<br> <br>The current price of Rs 88 does not reflect a 4 fold increase in gas that is moved through the GSPL network over the next three years or the doubling in pipeline capacities that will further propel a exponential volumetric movement of Gas over Gujarat.<br> <br>More importantly for investors, GSPL unlike Gail is not subject to fixed and arbitrary gas transmission tariffs dictated by the Ministry of Petroleum and Natural Gas, Delhi, or has to accept Natural Gas at price fixed as is the case with R-LNG procured by Petronet LNG from Ras Gas. <br> <br>GSPL has been set up as an open-carrier with take or pay agreement with anyone using the gas pipelines either to move gas or to buy gas. Thus, transmission tariffs are contracted on the distance that gas travels through the GSPL pipeline and deals are not struck at a fixed figure that Gail earns whether a customer is based in Uran or Jagdishpur. The model for GSPL is incremental and proportional to the distance travelled by the Natural Gas on its network.<br> <br>Moreover, the Revenue model for GSPL is much superior than GAIL, for neither are there fixed tariffs nor is there a subsidy element in the form of sinking money into projects dictated by the Central Government-a case in point being the Aonla Petrochem complex that Gail set up under GOI dictats, the failed bids it made for the Myanmar Gas or the Gas blocks which it is prospecting in Egypt without being a GAS E&P company.<br> <br>The market capitalisation of GSPL is also much lower for a network of comparable size. GSPL with a pipeline network of 1100 kms draws a market capitalisation of Rs 5400 crore, while GAIL with a pipeline network of just about 2000 kms fetches a market capitalisation of Rs 40,000 crore. <br> <br>Quite significantly for GSPL, the deal with RIL is a win-win situation for both entities. While RIL gets to use the entire 2400 km network of GSPL to distribute the KG natural gas into Gujarat for civillian use as piped natural gas (PNG) and as compressed Natural Gas (CNG) through Reliance Petrol Pumps for vehicular usage.<br> <br>RIL will also use the GSPL pipeline to move KG gas to its Jamnagar complex, thirdly, RIL will be putting up the East-West pipeline that links Kakinada (RILs KG production point) with Uran or Dahej which will be GSPLs take-up point for the KG gas. In addition, Gujarat State Petroleum will use the East-West RIL pipeline to move its Natural Gas from the KG fields through the Kakinada landing point into Gujarat, once again ending up using the GSPL network for state-wise distribution.<br> <br>Thus all three, GSPL, GSPC and RIL would share the same gas transmission network without over-lapping anyone to maximise the use of an existing but growing gas pipeline network.<br> <br>GSPL could be one of the top-performers of 2008.
GSPL First target was 97>&&;>&&;104>&&;>&&;130 and Mid term 145.....Gud Stock and excelent future.....
Guj State Petronet Ltd (GSPL) @ 60 looks very good. <br>GSPL is our highest conviction pick amongst Indian gas utilities, driven by: <br>1) strong visibility fueling a 30% volume CAGR over FY08-<br>12E&&; <br>2) timely capacity build-out and superior execution&&; <br>3) sound business model&&; and <br>4) low regulatory risk. ~50% stock correction appears unwarranted as business fundamentals and industry outlook remain robust.
Gujarat State Petronet<br>Buy<br>Price: Rs89 Target Price (Mar 10): Rs106<br><br>Volume driven.<br><br>*Performance continues to improve: During the second quarter,<br>GSPL continued to build on the strong volume growth witnessed in the<br>first quarter. Gas transportation volume increased from 25 mmscmd in<br>Q1 FY10 to 31 mmscmd in Q2 FY10. Tariff reduced marginally from Rs.<br>0.9 / scm to Rs. 0.89/scm, in line with our previous note of 28th July.<br>On a quarter-on-quarter basis, the Income from Operations increased<br>from Rs. 2381 mn. to Rs. 2547 mn, EBIDTA increased from Rs. 1980<br>mn. to Rs. 2443 mn. and PAT increased from Rs. 805 mn. to Rs. 1100<br>mn.<br>
• GSPL Nov. Future (Rs. 94)<br><br>Buy only in the region 93-94 with a stop loss<br>below 91.5 for an intra-day target of 98.
With a strong base and good management the going is good but it is time for the CEO and the directors to protect the shreholders who have a long wait,that too when liquid GOLD is in their hands.
Fix Price - Rs 15 Per Trade
Rs 899/Month,8999/Year for
Equity Cash and F&O
Rs 499/Month,4999/Year for
Lowest Transaction Charge
Lowest Call & Trade Fee
Lowest Stamp Duty
Free Equity Delivery Trades
Flat Rs 20 Per Trade for F&O
Rs 999 for Unlimited Trading
Brokerage: Intraday @ 0.02%, Delivery @ 0.15%
Beginner, seasoned investor, active trader or HNI. Get customised solutions.