Gujarat Gas Ltd. share price target

reliance on Russian gas (which accounted for 40% of gas supplies) will keep spot LNG at elevated levels. Also GGAS has cut supplies to industrial customers by ~1mmscmd to reduce dependence on spot LNG, which accounts for 21% of FY22E supplies. To tide over tight market conditions, recently GSPC (parent of GGAS) won tenders to secure 0.58mmscmd (5% of...

PAT at | 121.9 crore, down 68.9% YoY, 51% QoQ (estimate: | 178 crore) What should investors do? Gujarat Gas' share price has grown ~2x+ in last two years (from ~300 in February 2020 to 647 in February 2022). WE maintain our HOLD rating on the stock...

We interacted with one of the largest Morbi based unlisted ceramic majors to better understand demand trends, opportunities and its impact on GGAS. Morbi accounted for over 90% of India's ceramic production and ~60% of GGAS gas demand. While demand remains robust post pandemic, sharp increase in gas prices and continued high freight rates have led Morbi's ceramic industry to operate at ~85% utilization from over 95% a year back....

We maintain our FY22-24E earnings as Q2 results were impacted by sharp hike in gas prices (up 25%Q/Q). Volume growth remains impressive despite plant shutdown by ceramic players for a month given spike in freight rates; two year CAGR of 10.5%. GGAS reported impressive results with EBIDTA/PBT of Rs4.2bn (-42%Q/Q; 2 yr CAGR 6.6%) and Rs3.3bn (-48%Q/Q; 2 yr CAGR...

Spot LNG prices have risen to USD35/mmBtu for Jan'22, from lows of USD2/mmBtu in May 2020. Low gas prices, coupled with low oil production and associated gas production, resulted in low gas inventory across the globe. A severe winter in the US further worsened supply, resulting in spot LNG prices surging to USD32/mmBtu in Jan'21. However, as the production of associated gas rose, prices soon fell to USD10/mmBtu. However, an unusually hot summer in Europe, coupled with low supply from Russia and Norway, resulted in European gas inventory declining to 50% full,...

GGAS stock price fell 20%, as soaring spot LNG price of over $20/MMBtu (3x from Q1FY22 levels) and lower container availability hit Morbi volumes which accounts for ~60% of company's volumes. However, we believe recent correction offers an attractive entry point given 1) likely start of new gas (Nord Stream 2) pipeline (40MTPA capacity) supplies from Russia by early CY22 to help ease spot LNG prices 2) GGAS has entered into oil linked contracts for cutting reliance on spot volumes to 24% in FY22 (~37% in FY21) 3) recent price hikes in CNG and PNG of 4%/15% to shield margins and 4) aggressive...

The quarter witnessed strong growth of 22% YoY in volumes to 12.1 mmscmd. Industrial volumes continued their growth momentum and were at 9.6 mmscmd vs. 7.7 mmscmd YoY and 9.2 mmscmd QoQ. CNG volumes at 1.7 mmscmd also reported strong growth on YoY (16%) as well as sequential basis (11%). Domestic/commercial PNG volumes at 0.8 mmscmd recovered fully and were up 8% YoY. While volume growth across segments was encouraging, current quarter (Q1FY22E-TD) has seen a decline in demand owing to Covid-19 led restrictions. However, the decline...

Near term weakness offers good entry point, as GGAS will benefit from rising judicial activism to control industrial pollution in the long term. We change our FY22/23E earnings by -4%/+3% to factor in near term volume impact due to pandemic concerns and even increase our FY23E estimates. We remain constructive on GGAS volume prospects as imposition of 200350% import duty on Chinese imports to US has helped domestic exporters in Morbi, which is India's ceramic hub and accounts for over 60% of GGAS...