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Informist, Monday, May 25, 2026

 

By Reshma Ravi

 

MUMBAI – Gujarat Gas Ltd. is expected to report a substantial fall in its net profit for the March quarter. The company's bottom line is likely to be weighed down by a sharp decline in industrial gas volumes, particularly from the Morbi cluster, amid supply disruptions and higher spot liquefied natural gas prices driving up its gas sourcing costs.

 

The company is likely to post a standalone net profit of INR 1.64 billion for the quarter, according to an average of estimates from 11 brokerages. This is a fall of 43% on year and over 38% on quarter. The company is expected to post net sales of INR 34.67 billion, down over 15% on year and over 5% sequentially.

 

The highest estimate for the company's net profit is INR 2.68 billion from Emkay Global Financial Services Ltd. while the lowest estimate is INR 94 million from Motilal Oswal Financial Services Ltd. The highest estimate for the company's net sales is INR 37.70 billion from Nuvama Wealth Management Ltd. while the lowest is INR 31.50 billion from Prabhudas Lilladher Pvt. Ltd.

 

Brokerages attribute the expected decline in Gujarat Gas's March-quarter earnings primarily to a sharp drop in volumes and significant margin compression. Most analysts expect industrial gas volumes to have tumbled, particularly in the ceramic hub at Morbi in Gujarat, because of supply disruptions after war broke out in West Asia and reduced availability of spot LNG. A slowdown in this cluster directly hits the company's sales volumes. Gujarat Gas is the authorised supplier of piped natural gas in Morbi.

 

"We expect volumes to fall by 4% YoY (year on year) as healthy growth in CNG (compressed natural gas) (+12%) is offset by lower PNG industrial volumes (-18%) due to weakness in its Morbi industrial cluster amidst shutdown in Mar ... due to gas supply disruptions caused by the tension in West Asia," Nuvama said. Profitability is also likely to have been hit by rising input costs, as higher spot LNG prices and greater reliance on such purchases increase gas sourcing costs.

 

Gujarat Gas is expected to post earnings before interest, tax, depreciation, and amortisation of INR 3.04 billion, according to the average of estimates. The highest estimate for the company's EBITDA is INR 4.35 billion from Emkay Global and the lowest is INR 917 million from Motilal Oswal.

 

Brokerages expect the company's EBITDA to have weakened significantly on higher spot LNG prices and greater reliance on costlier gas. Equirus Securities Pvt. Ltd. highlighted that exposure to spot LNG and Brent-linked contracts is likely to have compressed spreads with EBITDA per standard cubic metre falling to INR 4.50, down 23% on quarter.

 

Price cuts in the industrial segment, particularly in Morbi, along with higher operating expenses will add to the pressure on the gas distribution company's EBITDA margin. "Its margin could also decline to INR 4.6/scm (INR 5.8/scm in 3QFY26) due to price cut of INR 4.5/scm in the industrial segment in Morbi w.e.f. (with effect from) Jan '26 and slight rise in opex (operating expenditure) on negative operating leverage," JM Financial said.

 

A key parameter to monitor for the quarter would be the pace of recovery in industrial demand, especially in the Morbi ceramic cluster, where any improvement in gas availability and export-led production could support Gujarat Gas's sales volumes.

 

For the December quarter, Gujarat Gas had posted a net profit of INR 2.66 billion, up nearly 20% on year. Its revenue from operations, including excise duty of INR 2.07 billion, had fallen around 11% to INR 38.65 billion. Excluding excise duty, the company had reported a revenue of INR 36.58 billion.

 

Of the 11 brokerage reports on the company available with Informist, eight have a "buy" recommendation on the stock with an average target price of INR 457 per share, up over 20% from the current market price. Two brokerages have a "hold" recommendation while one says "sell".

 

At 1345 IST, shares of Gujarat Gas were at INR 379.10 on the National Stock Exchange, up nearly 2% from Friday. The stock has fallen nearly 4% since the company released its December quarter earnings on Jan. 20. Gujarat Gas will detail its March quarter results Tuesday.

 

Following are the March quarter earnings estimates for Gujarat Gas Ltd., in INR million, from 11 brokerage firms in descending order of the net profit estimate: 

 

Brokerage	Net Sales	Net Profit	EBITDA
Emkay Global Financial Services Ltd.	33,374	2,680	4,350
Elara Securities (India) Pvt. Ltd.	36,900	2,100	3,700
Equirus Securities Pvt. Ltd.	37,140	2,100	3,527
JM Financial Institutional Securities Pvt. Ltd.	32,690	2,021	3,582
YES Securities (India) Ltd.	33,733	2,019	3,556
Prabhudas Lilladher Pvt. Ltd.	31,500	2,000	3,600
Nuvama Wealth Management Ltd.	37,703	1,879	3,151
Nomura Equity Research	35,800	1,500	2,700
Systematix Shares and Stocks (India) Ltd.	33,854	811	2,506
ICICI Securities Ltd.	35,000	800	1,800
Motilal Oswal Financial Services Ltd.	33,698	94	917
Average	34,672.00	1,636.73	3,035.36

 

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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