Anil Singhvi’s Stock of the Day: GSPL gets Citi upgrade, potential upside to Rs 325; should you buy?

Market expert Anil Singhvi has picked Gujarat State Petronet Ltd. (GSPL) as his stock of the day, citing bullish cues from Citi’s latest upgrade. Singhvi suggests purchasing GSPL in the cash market with a stop loss at Rs 269 and target levels at Rs 277, Rs 280, and Rs 285. His recommendation comes as Citi upgraded GSPL from 'Sell' to 'Buy' with a target price of Rs 325, suggesting a 20 per cent rally from here.

GSPL gets PNGRB nod for pipeline expansion

GSPL has obtained approval from the Petroleum and Natural Gas Regulatory Board (PNGRB) to augment its high-pressure gas pipeline network in Gujarat. The flagship project, the Anjar-Palanpur pipeline, will increase 12 mmscmd capacity to GSPL's grid, taking its overall capacity to 45 mmscmd in the next three years. The company will invest Rs 2,051 crore in this expansion, improving connectivity between the Mundra LNG terminal and the Mehsana-Bhatinda pipeline.

Citi upgrades GSPL, finds risk-reward appealing

After a 35 per cent correction in GSPL's share price in the last six months, Citi thinks the risk-reward ratio in the stock currently makes it an attractive bet. Even after the 47 per cent tariff reduction by the regulator in April 2024—from Rs 34 per mmbtu to Rs 18 per mmbtu for HP gas tariffs—Citi is optimistic about the medium-term outlook. The brokerage views the potential for potential tariff reversal in the future that could further spur GSPL's earnings.

LNG demand and structural tailwinds drive growth

Citi points out that GSPL has struggled in previous years as a result of volatile LNG prices and decreasing transmission volumes. Yet, India's increasing gas consumption, fueled by industrial growth and the need for cleaner energy, provides a strong structural tailwind. The sanctioned expansion will enhance gas transportation efficiency and enable future revenue growth.

Should you invest in GSPL now?

With Anil Singhvi’s strong buy call, Citi’s double upgrade, and GSPL’s long-term growth drivers in place, the stock appears poised for a rebound. Investors should watch upcoming developments, including the execution of its expansion plans and any regulatory updates on tariffs, for further cues.