Gujarat Gas Cuts PNG Prices For Industrial And Commercial Use
India's largest city gas distributor Gujarat Gas Ltd. has cut PNG prices for industrial and commercial use to pass on the benefits of lower raw material costs.
Prices of piped natural gas has been cut by Rs 2.5, or close to 8 percent, to Rs 27-29 per standard cubic metre, JN Singh, chairman at Gujarat Gas, told BloombergQuint.
In India, gas distributors can only supply imported fuel for industrial use. PNG prices are linked to the global market and are prone to fluctuations. In the last six months, Singapore Liquified Natural Gas, the Asian benchmark, has fallen more than 47 percent to $4.4 per million British thermal unit.
Nearly half of the gas-consuming industrial units in India are located in Gujarat. Also, Gujarat Gas generates close to 70 percent of its revenue from sales to industrial and commercial users.
Lower gas prices, coupled with the National Green Tribunal's order to shut down units that use polluting fuels, could aid the company's volumes. After the NGT order, Gujarat Gas' volumes have risen to 8.5 million metric standard cubic meter per day—31 percent higher than the average of the previous financial year.
An average of 10 analyst estimates compiled by BloombergQuint shows Gujarat Gas' volumes may grow at an annualised rate of 17.8 percent over financial years 2019-2021.
Of the 28 analysts covering the stock, 71.4 percent recommend a ‘Buy', 18 percent suggest a ‘Hold', while the rest have a ‘Sell' rating, according to Bloomberg data. The 12-month consensus target price implies an upside of 12 percent.
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