The share price of Gujarat State Petronet Ltd (GSPL) has plunged sharply today after a number of brokerages downgraded the stock. The downgrades come after the Petroleum and Natural Gas Regulatory Board (PNGRB) cut tariffs for the company’s high-pressure (HP) network by 47 percent.
The tariff cut is a major blow to GSPL, which had been expecting a much smaller reduction. The company had sought tariffs of ₹ 51-54/mmbtu, but the PNGRB has approved tariffs of only ₹ 18.1/mmbtu. This is 47 percent lower than the existing tariff of ₹ 34/mmbtu.
The tariff cut is expected to have a significant impact on GSPL’s financial performance. Kotak Institutional Equities has estimated that the company’s FY25-26 earnings estimates could be reduced by 28 to 37 percent as a result of the tariff cut. Nuvama Institutional Equities has also downgraded the stock, saying that the tariff cut could result in a 42 percent and a 40 percent reduction in EBITDA estimates for FY25 and FY26.
The downgrades reflect the brokerages’ concerns about GSPL’s future prospects. The company is facing a number of challenges, including the rising cost of gas and the increasing competition from other gas suppliers. The tariff cut is likely to make it even more difficult for GSPL to compete.
The share price of GSPL has fallen by over 20 percent since the tariff cut was announced. The stock is currently trading at ₹ 304.25, down 0.13 percent from the previous close.
The tariff cut is a major setback for GSPL, and it is likely to have a significant impact on the company’s financial performance. The downgrades from the brokerages reflect the concerns about the company’s future prospects.
