Gujarat State Petronet rating – Buy: Q4FY21 Ebitda was ahead of expectations

Gujarat State Petronet’s (GSPL’s) Q4FY21 Ebitda of Rs 3.4 bn (-3% y-o-y, -13.6% q-o-q) surpassed our and consensus estimates led by 49% y-o-y dip in opex due to low compression cost as volumes dipped.

Key highlights: (i) Current volumes are ~35mmscmd, but June is likely to exit at ~40mmscmd. The shortfall in CGD/power volumes is being compensated by addition of ~4mmscmd Reliance volumes; (ii) the Anjar-Chotila pipeline should be commissioned by Dec 2021, which is likely to augment incremental ~5mmscmd volumes from CY22; (iii) net tariffs fell 13.7% y-o-y as low pressure pipelines due to lower volumes didn’t require compression. Robust Rs 50 bn FCF over FY21-23e and Rs 20 bn in FY21 will help GSPL turn debt free. Retain Buy.