Oil & Gas Q4 Results Preview - Lower Gas Price To Boost Volume, Earnings: Systematix

Systematix Research Report

Our gas coverage universe’s Ebitda is expected to rise substantially (147% YoY and Ebitda margin by 836 basis points YoY) while it may remain largely flattish QoQ. Total gas consumption in India increased to average 181mmscmd in Jan-February 2024 versus 177 million metric standard cubic metre per day in Q3 FY24, largely driven by higher liquefied natural gas import which increased to 81 mmscmd from 77 mmscmd, respectively.

Spot LNG price also declined sharply to average $9.4/ metric million British thermal unit in Q4 FY24 from $15.8/mmbtu in Q3 FY24 ($18.5/mmbtu in Q4 FY23).

Gail India Ltd., Mahanagar Gas Ltd. and Indraprastha Gas Ltd.’s Ebitda is expected to rise 5.8%/13.4%/10.3% QoQ, respectively on the back of better volume and margin recovery owing to lower spot LNG and high pressure-high temperature prices, favorable economics with alternative fuels, and improvement in vehicle registrations.

Volume growth for both Petronet LNG Ltd. and Gujarat State Petronet Ltd. is likely to be strong on the back of higher gas consumption. Petronet LNG’s total volume is expected to rise to 240 trillion British thermal unit from 232 tbtu QoQ, 185 tbtu YoY while a 5% tariff hike at Dahej to impact positively.

Though inventory loss may hurt earnings which is not factored. GSPL’s volume is also likely to grow to 31 mmscmd from 29 mmscmd led by higher volume from power and city gas distribution businesses.

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