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ICICI Securities Report
Gujarat Gas Ltd. has delivered a strong 2.4 times YoY increase in Ebitda to Rs 5.8 billion and a three times YoY jump in net earnings to Rs 3.7 billion in Q3 FY23, despite a material 36% YoY dip in overall volumes.
Earnings came in ahead of our estimates of Rs 4.5 billion Ebitda/Rs 2.7 billion profit after tax. However, QoQ Ebitda/profit after tax declined 9%/8%, respectively. Lower volumes from the key region of Morbi have driven weakness seen over nine months-FY23 but with rising propane prices from Feb-23, we feel Q4 may see some revival in volume trends for Gujarat Gas.
Earnings remain strong, driven by limited requirement of the costliest gas in the portfolio (spot liquefied natural gas) and sales realisation lagging cost declines by a wide margin.
Going forward, the balancing act between volumes and margins will likely remain volatile, even as we believe softer gas price environment for both domestic and LNG and relatively stronger propane price environment could drive a steady improvement for FY24/25E earnings per share.
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More Research Reports On Gujarat Gas' Q3 FY23 Results Review
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