GUJGASLTD - Gujarat Gas Limited Share Price

In the Q1 FY '26 Earnings Conference Call, management provided a cautious yet optimistic outlook for Gujarat Gas Limited (GGL). Key highlights include:

1. Revenue and Profit Metrics:

   • Revenue from operations stood at Rs.4,065 crores, compared to Rs.4,615 crores in the same quarter last year.
   • EBITDA was reported at Rs.579 crores, slightly up from Rs.574 crores year-over-year.
   • Profit after tax was Rs.327 crores, relatively stable compared to Rs.330 crores the previous year.
   • The EBITDA margin was reported at Rs.7.17 per SCM for the quarter, with an expected average range of Rs.4.5 to Rs.5.5 for the full financial year.

2. Capital Expenditure:

   • Close to Rs.121 crores was invested in gas infrastructure in Q1, with an annual CAPEX plan of Rs.800-1,000 crores.

3. Customer Base Growth:

   • GGL's domestic customer base has surpassed 2.3 million, adding approximately 36,000 new connections in Q1.
   • Industrial sales volumes decreased to 4.71 MMSCMD, primarily due to a shift from natural gas to propane in Morbi.

4. CNG Performance:

   • CNG sales volumes increased by 12% year-over-year, with sales volume reaching a record high of 3.72 MMSCMD.
   • The CNG vehicle base expanded significantly to approximately 15.65 lakh, reflecting a solid 15% growth from the previous year.

5. Future Initiatives:

   • GGL aims to source and sell propane and LPG to industrial clients, targeting a market share of 25% in the propane market in Morbi.
   • Management emphasized a focus on digital transformation, including implementing a robust SCADA system and planning for an advanced ERP system to enhance operational efficiency.

6. Market Dynamics:

   • The management acknowledged ongoing uncertainties in the Morbi market due to upcoming festivals potentially affecting demand.
   • Price adjustments will continue to be monitored, especially in light of fluctuating global LNG prices, which should help manage industrial margin pressures.

Overall, the management remains optimistic about GGL's ability to navigate market challenges while driving growth through infrastructure expansion and strategic initiatives aimed at improving service offerings.

Major Questions and Answers from the Q&A Section of the Earnings Transcript

Question 1: "Can we get an overall percentage breakup in terms of sourcing of 8.88 MMSCMD that we have done? Overall, how much gas is being sourced from which source in percentage terms?"

Answer: "Gas from short-term contracts comprises 34%, long-term contracts makes up 38%, while the remainder is domestic gas, largely from APM and New Well Gas sources."

Question 2: "How much of HPHT gas did we get in this quarter?"

Answer: "We received close to 0.7 MMSCMD of HPHT gas in this quarter."

Question 3: "What will be the margins on the propane distribution?"

Answer: "It's difficult to estimate margins as this is a new venture for us. We'll gain better clarity once we have a good grasp of the market and can evaluate operational costs vs revenue."

Question 4: "Any guidance on volumes specifically from Morbi going forward for the next few quarters?"

Answer: "It's hard to provide exact numbers due to market conditions. We're reviewing demand trends continuously and will adapt accordingly as the situation unfolds."

Question 5: "What current volumes of propane are you expect to target in Morbi?"

Answer: "Yes, we aim for approximately 1.2 to 1.3 MMSCMD, representing about 25% of the current propane market in Morbi."

Question 6: "Have you applied for the propane distribution license towards the regulator?"

Answer: "We are currently awaiting credit rating approvals necessary to further our applications for the required licenses."

Question 7: "What is the outlook for EBITDA margins this year?"

Answer: "Our guidance is set at Rs. 4.5 to Rs. 5.5 per SCM due to market uncertainties, especially with festival season approaching impacting demand."

Question 8: "What kind of reduction can we expect as global LNG suppliers come online?"

Answer: "We're optimistic about reduced LNG prices due to new supplies coming on stream, which we anticipate will create downward pressure on prices."

These responses encapsulate management's perspective on various questions from analysts, outlining the company's sourcing strategy, market expectations, and future initiatives while providing key operational details.