Gujarat State Petronet shares nosedive 20% after regulator slashes tariff
Shares of Gujarat State Petronet Ltd (GSPL) were locked in a 20 percent lower circuit at Rs 302.15 in the morning trade on April 22 after the Petroleum and Natural Gas Regulatory Board (PNGRB) slashed tariffs for the company’s high pressure (HP) network by a whopping 47 percent.
The approved tariff of Rs 18.1/mmbtu effective from May 1, is not just 47 percent lower than the existing tariff (Rs 34/mmbtu) but also a third of the tariff sought (Rs 51-54/mmmbtu) by GSPL.
The sharp cut also came as a negative surprise for GSPL. Analysts at Kotak Institutional Equities said there was a case for a tariff cut of 20-30 percent due to GSPL’s higher actual volumes (versus the last tariff order) and delays (revision due from April 2021).
That’s a significant drop for Gujarat State Petronet (GSPL) shares. Here’s a possible explanation for the news:
- Tariff Reduction:Â A regulatory decision likely reduced the price GSPL can charge for its services, impacting their revenue potential. This could have spooked investors, leading to the sharp sell-off and 20% drop in share price.
Here are some additional points to consider:
- Impact Analysis:Â It would be helpful to find out more details about the tariff reduction and how it might affect GSPL’s profitability. Financial news websites or investment research reports might provide further insights.
- Future Outlook:Â While the current news is negative, it’s important to consider GSPL’s long-term plans. How will they adapt to the lower tariff structure? Are there any cost-cutting measures they can implement?
Remember, short-term stock price movements shouldn’t be the sole reason for investment decisions. Conduct thorough research to understand the company’s fundamentals and future prospects before making any investment choices.