Credit Rating Assignment Disclosure

Credit Rating Details

CARE Ratings Limited assigned the following credit ratings on October 27, 2026:

  • Long-term/Short-term bank facilities (₹250 crore): CARE AA+; Stable / CARE A1+
  • Long-term bank facilities (₹50 crore): CARE AA+; Stable

Rating Rationale and Key Strengths

The rating derives strength from:

  • GSPL's established position as one of India's largest natural gas transmission players and leadership in Gujarat
  • Strategic location with connectivity to major natural gas supply sources including Hazira, Dahej, Mundra, and Swan LNG terminals
  • Open-access operating model with 44.30 MMSCMD contracted volumes providing medium-term revenue visibility
  • 2,878-km natural gas pipeline network covering 26 districts in Gujarat
  • Cost-plus tariff structure allowing 12% post-tax return on capital employed as per PNGRB regulations
  • Current tariff of ₹18.10/MMBTU for high pressure pipeline effective May 01, 2024
  • Strong financial profile with nil debt and PBILDT interest coverage of 44.49x in FY26
  • Cash and bank balances of ₹2,351 crore as of March 31, 2026

Financial Performance

FY26 Financials (Audited):

  • Total Operating Income: ₹1,104.36 crore
  • PBILDT: ₹608.91 crore
  • PAT: ₹405.63 crore
  • Natural gas transmission volumes: 28.8 MMSCMD (6% decrease from FY25's 30.8 MMSCMD)
  • Overall gearing: 0.00x

Corporate Structure Background

GSPL Transmission Limited was incorporated in July 2024. Pursuant to a scheme of arrangement effective May 1, 2026, the gas transmission business of GSPL and GEL was demerged into GTL with appointed date of April 1, 2025. The scheme resulted in elimination of GSPL's 54.17% shareholding in GGL (now Gujarat Energy Limited) and reduction of GTL's net worth by approximately ₹3,900 crore.

Key Weaknesses and Constraints

Capital Expenditure Risks:

  • ₹3,500 crore capex planned over 2-3 years for pipeline expansion and new spur lines
  • Primarily funded through internal accruals and surplus liquidity, with potential term debt for shortfalls
  • Project implementation and regulatory approval risks associated with mid-sized capex

Joint Venture Exposures:

  • GSPL India Gasnet Limited (GIGL): 52% stake, achieved COD on August 22, 2024 for 1,418 km pipeline
  • FY26 TOI: ₹315 crore (vs ₹240 crore FY25), PBILDT: ₹250 crore (vs ₹176 crore FY25)
  • Volume: 4.8 MMSCMD (vs 3.7 MMSCMD FY25), requires promoter funding for shortfalls
  • Debt reduced from ₹5,076 crore to ₹4,289 crore at project COD
  • GSPL India Transco Limited (GITL): 52% stake
  • FY26 volume: 1.81 MMSCMD (vs 2.08 MMSCMD FY25)
  • Transmission revenue: ₹106 crore (vs ₹111 crore FY25)
  • PBIDLT margin: 61.74%

Total exposure to JVs stood at 22% of net worth as of March 31, 2026.

Rating Sensitivities

Positive Factors:

  • Substantial increase in volume throughput leading to operational scale improvement

Negative Factors:

  • Major debt-funded capex and/or higher-than-anticipated JV investments leading to total debt/PBILDT beyond 1.50x sustained
  • Higher than anticipated shortfall funding in JVs due to delayed volume ramp-up

Outlook: Stable

The stable outlook reflects expectation that GTL will maintain its leadership position in Gujarat's natural gas transmission business and sustain healthy operational and financial risk profile with healthy capital structure in the medium term.

Liquidity Assessment

Liquidity is strong with:

  • Cash accruals of over ₹618 crore in FY26
  • Nil outstanding funded debt as of March 31, 2026
  • Free cash and bank balance of ₹2,351 crore as of March 31, 2026
  • Nil utilization of fund-based working capital limits for 12 months ending June 2026
  • 36% average utilization of non-fund-based limits for 12 months ending June 2026