Citi has upgraded Gujarat State Petronet Ltd (GSPL) to a ‘Buy’ with a target price of ₹325, indicating a 19% upside potential from the current market price of ₹273.00. The brokerage sees GSPL’s capacity expansion in its high-pressure (HP) gas pipeline network as a key growth driver.
The Petroleum and Natural Gas Regulatory Board (PNGRB) has approved GSPL’s proposal to lay a new pipeline (Anjar-Palanpur) in Gujarat, which will increase the capacity of its HP gas grid by 12 million metric standard cubic meters per day (mmscmd). The approved ₹21 billion capex for this pipeline is expected to be executed over the next three years. Citi believes that once the expenditure on the pipeline is incurred, it could lead to an upside in GSPL’s HP gas tariff, assuming other factors remain constant.
Despite this positive development, GSPL’s stock has corrected by 35% over the last six months, making valuations more attractive. However, Citi also noted that GAIL and Mahanagar Gas Ltd (MGL) remain its preferred picks in the gas sector.
Disclaimer: Stock market investments are subject to risks. Investors are advised to conduct their due diligence before making any decisions.
