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Gujarat State Petronet Ltd (GSPL)
The growth engine…
The leader in Gujarat
• Gujarat State Petronet Ltd (GSPL), a GSPC group company, is a
pure gas transmission company, with a current pipeline network
of ~1900 km spread across Gujarat
• GSPL’s gas transmission volumes stood at 35.6 mmscmd in FY11
• Authorisation and tariff fixation of existing network is in progress
by Petroleum and Natural Gas Regulatory Board (PNGRB)
• GSPL (52% stake) through a consortium has recently received
authorisation to implement Mehsana-Bhatinda, Bhatinda-Jammu-
Srinagar and Mallavaram-Bhilwara pipeline projects. The
company intends to incur a capex of | 12,200 crore on these
pipelines over the next three years and believes it would yield an
equity IRR of 15% on these projects
Going ahead
• The management intends to increase the volumes from 35.6
mmscmd in FY11 to 45 mmscmd over the next two years. This
would add to the revenue and profitability of the company over a
long run.
• GSPC Gas (GSPL holds ~40% stake in the company) intends to
come out with an IPO in H2FY12E/ H1FY13E. GSPC reported PAT
of | 148 crore in FY11. We believe the IPO would unlock value for
GSPL, going forward.
• The company would spend ~| 600-700 crore over the next two
years to expand their existing network in Gujarat. The current
pipeline network is around 1900 km, which will be increased to
2400 km in the next five years
• In FY08-11, net sales, EBITDA and net profit have grown at 36%,
39% and 72% CAGR, respectively. GSPL also has healthy return
ratios with RoE and RoCE at ~25% and 24%, respectively. The
company also enjoys a healthy EBITDA in excess of 90%
Valuation
We believe that steady growth in volumes and profitability, an extensive
pipeline network in Gujarat and ambitious expansion plans in and outside
the state bolster our bullish view on the stock. A new pipeline would also
add value to the stock, going forward.
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