Gujarat Gas has released the composite scheme of amalgamation and arrangement for amalgamation of Gujarat Gas (and subsidiaries), GSPC Gas and GSPC Distribution Networks (GDNL). GSPL owns a 39% stake in GDNL and 29% in GSPC Gas.
Based on the approved swap ratio, GSPL with be the second largest shareholder (after GSPC) in the merged entity GDNL with 25.8% stake. In our view, listing of merged entity GDNL will provide a value unlocking for GSPL. On our estimates, at the current price, this investment can be valued at R18-23 per a of GSPL (currently we do not assign much value to this investment).
GSPL's PAT of R91.5 crore was largely in line with our estimates (R93 crore), but 8% below Bloomberg consensus (R99.3 crore). After continued declines over last several quarters, gas transmission volumes at 20.8 mmsmcd increased 3% sequentially. Realised average tariff at R1.2 per scm (our estimate R1.27 per scm) declined 6% sequentially.