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ICICI Securities Report
Gujarat Gas Ltd. announced its first quarter of results post the merger of Gujarat State Petroleum Corporation Ltd. and Gujarat State Petronet Ltd. The merged entity is renamed as Gujarat Energy Ltd. while the gas transmission entity has been demerged into GTL (to be listed separately).
Q4 FY26 Ebitda/PAT of the new entity (Gujarat Energy) of Rs 780 crore/Rs 565 crore include material contribution from the trading segment (Rs 400 crore Ebitda in Q4), while CGD volumes of 8.9 million metric standard cubic metre per day beat the brokerage's estimates.
Ahead, scope and scale will likely swell, with a surge in Morbi industrial volumes to ~8mmscmd by end-May'26 (vs 2.2mmscmd in Q4), continued growth in domestic/CNG segments (new areas) and steady performance of the gas trading segment.
Valuation of nine times FY28E EPS, however, captures the upside and underplays the risks of execution/volatility in volumes. Reiterate Add.
Key upside risks:
- Sharper recovery in LPG (propane) prices;
- faster execution of expansion plans in new areas; and
- sharp drop in LNG prices.
Key downside risks:
- Longer sustained weakness in propane prices;
- slower rampup of volumes from new areas; and
- sharper spike in spot LNG prices.
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