In early 2019, sales volumes were down to ~2.1-2.2mmscmd, but the closure of coal gasifiers has boosted current sales volumes to ~3mmscmd at Morbi. Although ceramic manufacturers have shifted, they have not come forward to sign term contracts

Refer to important disclosures at the end of this report NGT order on closure of coal gasifiers likely to accelerate switch to PNG Click here to: Polling for Institutional Investor's 2019 Asia Research Team The National Green Tribunal (NGT) has ordered an immediate closure of coal gasifiers at Morbi ceramic cluster or switch to natural gas to continue operations, according to media reports. This comes in response to a petition filed for causing environmental damage, which was affirmed by the NEERI (plant modifications and zero discharge recommendations not...

7 March 2019 Oil & Gas The Delhi bench of the National Green Tribunal (NGT) has ordered the closure/dismantling of all coal gasifiers at Morbi in Gujarat, which is a major sales area for Gujarat Gas (GUJGA). But, according to our estimates, currently there are ~400-450 units running on coal gasifiers. Nonetheless, a blanket ban on all coal gasifiers would result in ~80-100 units going out of business completely as they would not be profitable. Peak potential is estimated at 5-6mmscmd out of which current sales stands at ~2.5mmscmd. In Jul12, the Central Pollution Control Board (CPCB) had announced a similar blanket ban on coal gasifiers, ordering the Gujarat Pollution Control Board (GPCB) to stop and dismantle all units. Back then, ceramic manufacturers had shifted to natural gas by Apr14. We have not changed our estimates as of now, but we note that an effective blanket ban could result in an immediate increase of 2.5mmscmd in volume (~38% of FY19E).

Gujarat Gas Limited, formerly GSPC Distribution Networks Limited, is engaged in the natural gas business in Gujarat. The Company is engaged in City Gas Distribution, including sale, purchase, supply, distribution, transport, trading in natural gas, compressed natural gas (CNG), liquefied natural gas (LNG), liquefied petroleum gas (LPG) and other gaseous form through pipelines, trucks/trains or such other suitable mode for transportation/distribution of natural gas, CNG, LNG, LPG and other gaseous form. The Company supplies Piped Natural Gas (PNG) for Domestic Usage to over 1,080,000 households in total in the state of Gujarat. The Company operates the HAPi pipeline, which is a 73.2 kilometers long and 18-inch diameter natural gas pipeline. The...

ICICI Securities Ltd | Retail Equity Research Gujarat Gas reported a good set of numbers on the profitability front in Q3FY19. Revenues increased 34.8% YoY to | 2117.4 crore. Total reported volumes increased 4.1% YoY and came in at 6.6 mmscmd vs. our estimate of 6.9 mmscmd. Volumes were below our estimates on account of lower sales volumes QoQ on the industrial PNG front Realisation were higher than our estimates at | 35.1/scm (our estimate: | 34.4/scm). Also, a lower-than-expected increase in gas...

8 February 2019 GUJGA reported significantly higher EBIDTA of INR3.2b (v/s INR2b a year ago, more than double QoQ) as against our estimate of INR1.8b. PAT came in at INR1.4b (v/s our estimate of INR576m; doubled YoY), primarily due to lower raw material cost. EBITDA/scm increased to INR5.3 (v/s our estimate of INR2.9, INR2.6 in 2QFY19), however, the street has reservations about sustainability of EBIDTA/scm above INR5. We model EBITDA/scm of INR3.9/4.0 for FY20/21. PNG industrial/commercial volumes stood at 4.6mmscmd (+2% YoY, -3% QoQ), while PNG household volumes were at 0.5mmscmd (+4% YoY, +2% QoQ).

ICICI Securities Ltd | Retail Equity Research Gujarat Gas made an announcement to split shares with its Q2FY19 results on November 3, 2018. The Board approved the sub-division of equity shares of face value of | 10 each into five equity shares of face value | 2 each fully paid. The record date for the same is January 16, 2019 while the ex-date for the same is today i.e. January 15, 2019. Consequently, Gujarat Gas' share price, as per yesterday's closing price, has dropped to | 133.6/ share from | 668/share. Currently, the stock is...

We retain our buy on the stock with the revised DCF valuation price target of INR 1,245 which is an upside of 86% over the next 24 months.

Gujarat Gas reported a disappointing set of numbers in Q2FY19. Revenues increased 41.2% YoY to | 1964.3 crore and came in above our estimates. Total reported volumes increased 16.5% YoY and came in at 6.7 mmscmd vs. our estimate of 6.5 mmscmd on account of higher sales volumes on the industrial PNG front Realisations were higher than our estimate at | 32/scm (our estimate: | 31.6/scm). However, sharp increase in gas costs due to increase in LNG prices and rupee depreciation led to decline in gross margins,...

Gujarat Gas volumes number were below our estimates. Growth in the commercial segment has been encouraging but has come at a cost of margin decline. Gujarat Gas was impacted by the sharp increase in the input cost mainly RLNG. Gas cost increased by 35.8% on a YoY basis. With prices on the higher side and ongoing festive season, Gujarat gas could not pass on completely the impact of increased input cost. Industrial segment (nearly 70% of volumes) is very price sensitive and creates lot of volatility on spreads. We believe that volume and spread balance will be the key for...

4 November 2018 GUJGA reported significantly lower EBITDA of INR1.6b (-21% YoY, -35% QoQ) compared to our estimate of INR2.4b, primarily due to its inability to pass on increased raw material cost to the consumers. PAT came in at INR411m (our EBITDA/scm declined sharply by 32% YoY (- 38% QoQ) to INR2.6, much below our estimate of INR4.0 due to lower pricing in the industrial segment. We model EBITDA/scm of INR3.3/4.1 for FY19/20. PNG industrial/commercial volumes stood at 4.7mmscmd (+18% YoY, +3% QoQ), while PNG household volumes were at 0.5mmscmd (+17% YoY, +28% QoQ). We have modeled PNG volumes of 4.8/5.3mmscmd for FY19/20.

Gujarat Gas reported a decent set of Q1FY19 numbers. Revenues increased 19.4% YoY to | 1765.1 crore, in line with our estimates. Although volumes at 6.4 mmscmd were slightly lower than our estimates of 6.6 mmscmd, realisations were above our estimates Realisations were higher than our estimates at | 30.1/scm (our estimate: | 29.5/scm). Gross margins were at | 7.1/scm (our...

Gujarat Gas reported a good set of numbers on the volume front while profitability was below estimates on account of higher tax rate and a lower-than-expected increase in gross margins. Revenues...

Gujarat Gas reported Q3FY18 results, which were largely in line with our estimates on the operational front. Revenues increased 27.7% YoY to | 1571.3 crore and came in above our estimate of | 1496.2 crore mainly on account of higher than estimates volumes Total reported volumes came in at 6.3 mmscmd vs. our estimate of 6 mmscmd due to higher industrial sales volumes. Gross margins at | 6/scm came in largely in line with our estimates of | 6.1/scm....

Gujarat Gas (GG) is one of India's largest player in the industrial gas segment and city gas distribution (CGD) with a dominant presence in Gujarat. It caters to the gas demand of ~3000 industrial consumers, ~5 lakh CNG vehicles and ~12 lakh households in Gujarat. Total volumes in FY17 were at 5.4 mmscmd with the industrial and retail segment contributing ~68% of total volumes. Gujarat Gas has been rapidly expanding its reach in Gujarat by way of securing licenses to expand its CGD network across five new areas, making it to 19 districts of Gujarat,...

Gujarat Gas announced its Q2FY18 results, which were below our estimates on both revenues and profitability front as a result of lower than estimated volumes. Revenues increased 12.5% YoY to | 1391 crore and came in below our estimates of | 1498.7 crore Total reported volumes came in at 5.7 mmscmd vs. our estimate of 6.1 mmscmd. Gross margins at | 6.7/scm came in below our estimates of | 7.3/scm on account of higher spot LNG prices. As a...

4.0mmscmd (+13% YoY, -9% QoQ), and PNG household volumes at 0.5mmscmd (+5% YoY, +4% QoQ). Sequential decline in volumes was led by non-inclusion of gas under GST, state bringing in a cut in VAT with a delay, and flooding-related shutdowns by consumers. According to management, the volumes lost have been made up for at the exit of the quarter. CNG volumes up 7% YoY: CNG volumes stood at 1.3mmscmd (+7% YoY, -1% QoQ). Unless CNG volumes become a larger contributor, the company would continue witnessing volatility in volumes and margins, in our view....

We had highlighted in our previous report how cheaper propane and LPG were emerging as the alternatives at Morbi. Sale of propane stands slightly lower at 0.07mmscmd due to an increase in prices. However, our channel checks suggest that there are 15 new propane installations coming up at Morbi by March 2018, and 28 more are in various stages of construction. Increased flexibility would result in higher volatility for GUJGA. Coal prices are at INR8/kg, ~15% cheaper than gas....

Volume growth to remain stable in coming quarters Volumes during the quarter increased 19.1% YoY to 6.1 mmscmd but came in slightly below our estimates of 6.3 mmscmd mainly on account of lower than estimated industrial and domestic PNG volumes. The quarter witnessed an uptick in price sensitive segments like Morbi ceramic segment due to lower spot LNG prices. This led to an improvement in YoY growth in Q1FY18 volumes. We expect GGL's volume growth momentum to continue in future mainly due to higher...