GSPL hits lower circuit of 19.99% after PNGRB's order; brokerages cut target prices

GSPL Share Price: Gujarat State Petronet Ltd (GSPL) hit a lower circuit of 19.99 per cent on BSE on Monday (April 22, 2024) after PNGRB cuts the company's high pressure grid tariff by 47 per cent.

The stock of the company ended the trading session lower by 19.60 per cent, or Rs 74.05, at Rs 303.80 on Monday.

GSPL's 52-week low is Rs 254.75, while its 52-week high is Rs 407.30.

Why GSPL stock nosedived? 

Petroleum and Natural Gas Regulatory Board (PNGRB) has cut GSPL's high pressure grid tariff by a sharp 47 per cent to 18.1 mmbtu.

The tariff has been reduced from 34/mmbtu to 18.1/mmbtu.

The new tariff will be applicable from May 1.

The decision came after GSPL had demanded a tariff of 51/mmbtu.

Analyst had estimated a cut of 10-15 per cent from PNGRB.

The tariff is reviewed after every 6 years.

GSPL said that it would challenge PNGRB's order.

Why did PNGRB cut rates?

PNGRB has the expectation of less capital investment in the future.

There will be less operational expenses on existing and new pipelines.

A higher utilisation level predicts a better volume.

Brokerage opinion/target price

Nomura has downgrade GSPL from 'buy' to 'underperform', cutting the target to Rs 320 from Rs 440.

It has sharply cut FY25-26F EBITDA by 37 per cent/42 per cent.

It has sharply cut EPS by 34 per cent/40 per cent.

CLSA has downgraded GSPL to 'sell' from 'outperform', cutting the share price target to Rs 330 from Rs 360.

Citi has maintained a 'sell' call, cutting the target to Rs 295 from Rs 330.