Gujarat Gas Q3 Results Review

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Gujarat Gas Ltd.’s Q3 FY23 reported Ebitda at Rs 5.82 billion (+145% YoY; -9.4% QoQ), stood above our and street estimates on better than estimated gross margin at Rs 12.8/standard cubic metre, translating into, better than estimated Ebitda at Rs 8.7/scm, even as gas sales at 7.3 million metric standard cubic metre per day, stood in-line.

In the nine months-FY23 so far, strong unit economics with average Ebitda per unit at Rs 8.1/scm, (9MFY22: 4.6), has helped offset weaker sales at 8.2 mmscmd (9MFY22: 10.9), as dependence on expensive liquefied natural gas dropped with lower sales.

Unfavorable natural gas pricing vs propane resulted in significant volume shift in Morbi’s ceramic cluster.

A cooloff in spot LNG prices to ~$19/metric million British thermal unit as we write (versus $31.2 in Q3 FY23) has rekindled the possibility of shift back to natural gas.

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