1.65% Dividend Yield: This PSU Oil & Gas Stock Hits 20% Lower Circuit After PNGRB Cuts Tariff On Pipeline

The shares of Gujarat State Petronet Ltd. (GSPL) witnessed a 20% tumble today, marking the first instance in its trading history of such a significant single-day decline. The nosedive came in response to the Petroleum and Natural Gas Regulatory Board's (PNGRB) decision to cut tariffs for GSPL's HP Pipeline network.

The PNGRB's tariff reduction caused rates plummeting by 47% to Rs 34 per mmBtu from the previous Rs 18.1 per mmBtu. This move, higher than market expectations, has given a severe blow to GSPL, which had proposed a revised tariff of Rs 50.8 per mmBtu.

Consequently, GSPL is bracing for a dent in its financials, with the company's Earnings Per Share (EPS) forecasted to plummet by 30% to 40% in the upcoming financial year 2025. PNGRB justified its decision by citing optimistic volume assumptions and an extension in the economic life of the pipeline.

Reacting to this development, brokerage firm Nomura revised its estimates, slashing GSPL's EBITDA projections for financial years 2025 and 2026 by 37% and 42%, respectively. Nomura also downgraded the stock to "Reduce," with a revised price target of Rs 320, down from the earlier Rs 440 per share.

Citi maintained its "sell" rating on GSPL, with a reduced price target of Rs 295, down from Rs 330 per share. Emkay also downgraded the stock, shifting its rating from "buy" to "reduce" and lowering the price target to Rs 370 per share.

GSPL shares plunged to Rs 302.15, hitting a lower circuit of 20%. This sharp decline underscores growing concerns among investors, with approximately 35% of analysts now advocating for a "sell" recommendation on the stock.

The stock delivered returns of just 15% over the past year and has given 20% gains over the last three years. In the past week alone, GSPL has slumped by a staggering 20.5%, further compounded by a 15% loss over the last month.