Gujarat Gas Q3 Results Review

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Gujarat Gas Ltd.’s total volumes came in line with our estimate of 7.3 million metric standard cubic metre per day; Morbi volumes stood at 2 mmscmd with the current volumes also at similar levels.

Ebitda margin was better than expected at Rs 8.7/standard cubic metre (our estimate of Rs 5/scm). Total consumption at Morbi across all fuels stands at 5.5- 6 mmscmd, suggesting a weak ceramic market.

Liquefied petroleum gas prices are at a premium of Rs 1/scm (expected to rise further in March 2023), compared to gas currently. While Propane is trading at a discount of Rs 2/scm, its prices are likely to rise going forward.

Spot LNG prices continue to fall to $17/metric million British thermal unit for March 2023 delivery from $29.7/mmBtu in Q3 FY23. A further cooling of these prices is expected to result in a volume recovery.

We estimate an Ebitda/scm of Rs 7.7/Rs 6.2/Rs 6.2 in FY23/FY24/FY25, respectively, versus Rs 5.3 in FY22.

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