Gujarat State Petronet Ltd. BSE Code 532702 CMP 90-92

GSPL at Glance

Gujarat State Petronet Limited (GSPL) was set up to complement the efforts of GSPC. While GSPC harnesses and procures natural gas, GSPL is building the infrastructure that transmits the gas across the state of Gujarat and ultimately allows last-mile linkage to the end-user.

GSPL is laying a gas grid, to facilitate gas transmission from supply points to demand centres.

State-of-the-art network

The gas grid is equipped with the latest bi-directional gas transmission technology to enable two-way gas flow. This introduces a lot of flexibility into transmission by allowing gas to be sourced or uploaded at either end of the pipeline network. Besides, the network is continuously monitored using SCADA systems integrated with GIS technology.

Flexibility of transmission

Another innovation is in the open access or contract carrier principle of transmission. This allows any gas transmission company to approach GSPL for permission to use the network on payment of the required charges. Thus, private sector participation in gas transmission is encouraged, which makes more volumes available for consumers.

Pipeline Network 

GSPL has already put in place a pipeline network of about 1874 km and further extension of pipeline network is going on. The company has signed gas transmission agreements with various industries for the transportation of natural gas from various supply sources in Gujarat.

OPERATIONAL MILESTONES

The Company has been expanding its pipeline network over the years. The build-up of the pipeline network over the years is given below:

Presently, the company transports over 35 MMSCMD of natural gas.

GSPL's Operation & Maintenance function is ISO 9001:2000, ISO 14001:2004 & OHSAS 18001:2007 certified. 

Audited Financial Result for the year ended 31st March, 2011

http://www.gspcgroup.com/pdf/gspl/GSPL-Q4-2010-11_Result.pdf

Gujarat State Petroleum Corporation Ltd [ GSPC ] harnesses and procures natural gas, GSPL is building the infrastructure that transmits the gas across the state of Gujarat and ultimately allows last-mile linkage to the end-user. The company's revenue model offers visibility over the long-term. GSPL's transmission contracts are on a "take-or-pay" basis which means that the user has to pay a fixed charge if he fails to transport gas during the contract period. The company has come a long way since 2001 when it owned just 15 km as compared to the current 1874 kms spread across the State of Gujarat which is one of the most vibrant States on Indian territory. The company transports gas to more than 31 customers including Refineries, Steel Plants, Fertilizer Plants, Petrochemical Plants, Power Plants, Glass industries, Textiles, Chemical and other miscellaneous industries. 

GSPL has signed a 15-year agreement with Reliance to transport 11 MMSCMD and another one with Torrent Power to transport 4.5 MMSCMD for 20 years. The long-term agreements lend visibility on usage of capacity and on revenues.

GSPL has picked up strategic stakes in group companies — GSPC Gas, Sabarmati Gas and Krishna Godavari Gas Network Ltd — that are setting up city gas businesses in Gujarat and Andhra Pradesh. City gas distribution, which includes supply of compressed natural gas for automobiles, will be a natural diversification for GSPL from its transportation business.

In the medium to long-term, the company also plans to venture beyond Gujarat into neighboring States such as Rajasthan and Maharashtra to set up pipeline networks.
Promotor's own 37.74 per cent, FII's own 10.51 per cent and DII's own 31.46 per cent in GSPL.  The five year topline growth was  26.97 per cent – revenues which were to the tune of Rs. 317 crs in FY07 shot up to Rs. 1046 crs in FY11.The 5 year bottom line grew spectacularly by 41.56 per cent – PAT which was just Rs.89 crs in FY07 shot up to Rs.506 crs in FY2011.

For the full year of fiscal 2010-11, total revenues was up by just 4.6 per cent at Rs.1046 crores but PAT shot up by 22.5 per cent to Rs.506.38 crs compared to Rs.413.77 crs in FY2010. Q4FY11 Net Profits too zoomed by 39.64 crs  to Rs.150.64 crs compared to Rs.107.87 crs in Q4FY10.

Company enjoys handsome PAT margins which hover around 41per cent [FY10] and 48 per cent in FY2011.  ROE and ROCE are around 29 and 27 per cent respectively. Gearing is 0.81 times and Interest Cover is 7.68 times. As the company keeps expanding its pipelines, depreciation and interest costs will lower all the three – PAT, ROE and ROCE.

2 Phase Buying Strategies Suggested [Always buy in SIP ways]

1^st Phase  : Buy at the current price range Rs 90 – 92 [50% of investment]

2^nd Phase : Add if the price falls down to Rs 78 - 80 [50% of investment]

Buying on dips is suggested.  

One should do his/her own research before buying. Stocks are subject to market risk. The recommendation made herein does not constitute an offer to sell or solicitation to buy any of the securities mentioned.