IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends ‘Reduce’ on Gujarat State Petronet.
“We initiate coverage on Gujarat State Petronet Ltd. (GSPL) with REDUCE. GSPL is a pure operator of gas pipelines. We believe GSPL’s transmission volumes would remain sluggish during FY12-14ii due to falling domestic gas supplies”, the brokerage said.
As a result, IIFL expects earnings to remain flat through FY14ii, at best on unchanged tariffs. Moreover, a possibility of 5-10% cut in tariffs presents a downside risk to earnings. These concerns would overshadow the inexpensive valuations (9x FY13ii), IIFL added.
The report was published by IIFL’s Institutional Equities Research desk.