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Prabhudas Lilladher Report
Gujarat Gas Ltd. reported lower than expected Q1 results with Ebitda/profit after tax of Rs 6.1 billion (down 13% QoQ; our estimate: Rs 6.5 billion) and Rs 3.8 billion (down 14% QoQ; our estimate Rs 4.1 billion).
Q1 industrial volumes were flat QoQ, as demand shifted to Propane due to seasonally low prices. However it will increase in H2 with winter demand.
Gujarat Gas has tied in spot liquefied natural gas volumes below $28/metric million British thermal unit till February 2023 (price is ~$22- 25/mmbtu till September 2022) which will support volumes as demand shifts in H2 when propane prices increase.
Also at current brent prices, blended industrial gas price will be down $1.1/mmbtu for Q2 (Q1 average $112/barrel of oil). We like Gujarat Gas as a structural play on industrial gas demand and maintain our FY23-24E earnings.
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