Since the merger ratio was announced at 10 of GGL for 13 of GSPL, GSPL should trade at approximately 350 if we consider GGL CMP of 450, so there is a slight discount on that front (GSPL CMP 325). So, now GSPL will basically mimic GGL with slight differences. Meanwhile, GGL is facing issues like all gas distribution companies with reduction in APM allocation and price of new well gas (priced at 12% of Indian crude basket) being at 20% premium to APM so this needs to be passed onto customers which can hurt volumes. All gas distribution companies like IGL, Adani Total Gas and Gujarat Gas have corrected quite a bit in past few weeks. Also, shareholders of GGL are exposed to GSPC indirectly till the time merger concludes so that is also a risk and outcome of appeal by GSPL against the tariff reduction by PNGRB will be significant.
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