Gujarat Gas Ltd. share price target

Gujarat Gas (GUJGA) has delivered strong Q4FY24 earnings, with 48% QoQ surge in EBITDA/67% QoQ rise in adj. PAT to INR 5.9bn/INR 3.7bn

Gujarat Gas (GUJGA) has delivered muted Q2FY24 earnings, with 23% YoY dip in EBITDA / 26% YoY dip in PAT to INR 5bn/INR 3bn, beating I-Sec’s estimates of EBITDA/PAT of INR 3.8/2.1bn, respectively. Earnings beat estimates despite a miss on volumes (9.3mmscmd vs estimates of 9.6mmscmd) with stronger margins offsetting the volumes miss.

Gujarat Gas (GUJGA) has hiked industrial gas prices at Morbi by INR 2.5/scm, the second hike in Q2, post a INR 2/scm hike taken in Aug’23. The decision has been driven by an improvement in propane prices in last 2-3 months. Prices have steadily improved since then, with Aug’23 prices at USD 470/t and Sep’23 prices declared at USD 550/t – coupled with an increase in import duties to ~18% from <6% earlier.

Gujarat Gas (GUJGA) has delivered a weak Q1FY24, with 36% YoY dip in EBITDA/ 44% dip in PAT to INR 3.9bn/INR 2.2bn, missing I-Sec estimates of EBITDA/PAT of INR 7/4.6bn, respectively. The miss was due to a 5% YoY dip in volumes and a sharp 32% dip in EBITDA/scm.

Gujarat Gas (GUJGA) faces a tough choice: prioritise volume growth or maintain margins over the next 12 months. The conversion of about 55% of available units in its major consumption hub of Morbi to dual fuel use poses a challenge.

Gujarat Gas (GUJGA) has reported 20% YoY dip in recurring EBITDA and 19% YoY dip in net earnings to Rs5.6bn/Rs3.7bn, respectively, with QoQ performance being largely flat. However, earnings were strongly above our estimates, with sharply improved costs in Q4FY23 driving a material beat vs our EBITDA/PAT estimates of Rs3bn/Rs1.7bn, respectively.

As per CNBC TV-18 (link), which we have confirmed with the Gujarat Gas (GGL) management, GGL has cut its Morbi industrial prices by a further Rs5/scm to keep prices competitive in the wake of the recent lowering of propane prices (estimated at ~Rs40/scm as of now). The revised industrial prices for Morbi are now at Rs39.5/scm (net of taxes) while non-Morbi prices remain at ~Rs47/scm.

Gujarat Gas (GGL) has delivered a strong 2.4x YoY increase in EBITDA to Rs5.8bn and a 3x YoY jump in net earnings to Rs3.7bn in Q3FY23, despite a material 36% YoY dip in overall volumes. Earnings came in ahead of our estimates of Rs4.5bn EBITDA/Rs2.7bn PAT.

Gujarat Gas (GGL) has delivered a strong 53% YoY increase in EBITDA and a 62% YoY jump in net earnings to Rs4bn in Q2FY23, despite a material 33% YoY dip in overall volumes.