CARE Ratings has reaffirmed the ‘Rating Watch with Developing Implications’ for Gujarat State Petronet Limited’s (GSPL) long-term bank facilities. This decision follows the proposed amalgamation of GSPL into Gujarat Gas Limited and the subsequent demerger of its gas transmission business. The ratings reflect GSPL’s established market position, strong financial profile, and strategic location, but also account for project and regulatory risks.
Credit Ratings Update
CARE Ratings Limited has announced that the long-term rating for Gujarat State Petronet Limited’s (GSPL) bank facilities remains under ‘Rating Watch with Developing Implications’. This follows the proposed amalgamation of GSPL into Gujarat Gas Limited (GGL) and the demerger of the gas transmission business into GSPL Transmission Limited (GTL).
Rationale for Rating Action
The rating continues to be supported by GSPL’s position as a major player in natural gas transmission, its leadership in Gujarat, and its strong financial profile. Key factors include its strategic location and open-access operating model. However, the rating is also influenced by project implementation and regulatory risks associated with its capital expenditure program.
Key Rating Drivers
GSPL’s strengths include:
- Strategic location in Gujarat, the highest natural gas-consuming state.
- Established track record in natural gas transmission.
- Operation on an open access basis.
- Medium-term revenue visibility through Gas Transmission Agreements (GTAs).
However, certain factors constrain the rating:
- Project implementation and marketing risks related to its capital expenditure program.
- Vulnerability to regulatory risks.
Financial Performance Snapshot
In FY25, GSPL’s total operating income (TOI) declined by approximately 55% to ₹1,111 crore, primarily due to a reduction in the levelized tariff. Despite the decline, the company maintained healthy profitability margins, with a PBILDT margin of 73% and a profit after tax (PAT) margin of 72%.
Project Updates
The proposed scheme of amalgamation is expected to be completed by January 2026, pending statutory and regulatory approvals. GSPL continues to implement its capital expenditure plans, with approximately ₹3,380 crore allocated until FY29 for network expansion and capacity augmentation, expected to be funded primarily through internal accruals.
Liquidity and Debt Profile
GSPL has strong liquidity, with free cash and bank balances of approximately ₹1,997 crore as of March 31, 2025. The company has no outstanding funded debt and has sanctioned working capital limits which remain largely unutilized.
Source: BSE