Adani Gas, Gujarat Gas, IGL ride strong Q4 earnings to hit record highs

While Adani Gas rallied 9% to hit Rs 180 per share, Gujarat Gas soared 6% to quote Rs 195 apiece on the BSE in intra-day trade on Monday.

Shares of gas distribution companies – Adani Gas, Gujarat Gas Company and Indraprastha Gas (IGL) – hit their respective record highs on the BSE on Monday, after reporting strong earnings in March quarter (Q4FY19).

Adani Gas rallied 9 per cent intra-day to quote Rs 180 apiece during the afternoon session, extending its previous week’s gaining streak of 21 per cent. The Gautam Adani-led city gas distribution (CGD) company logged a 91 per cent year-on-year (Y-o-Y) growth in consolidated net profit at Rs 75.75 crore in Q4FY19 from Rs 39.65 crore in previous year quarter.

While operational revenue grew 25 per cent to Rs 494 crore as against Rs 395 crore in the year-ago quarter, earnings before interest tax depreciation and amortization (EBITDA) for the quarter was up 52 per cent to Rs 140 crore against Rs 92 crore in the corresponding previous quarter.

Similarly, Gujarat Gas, too, hit a new record high of Rs 195 per share, soaring 6 per cent on the BSE in intra-day trade today. Over the past one month, the stock has outperformed the market by surging 23 per cent against a 3 per cent rise in the S&P BSE Sensex.

Ratings agency Crisil on May 30, 2019, revised the long-term bank facilities outlook for Gujarat Gas to 'Positive' from 'Stable', and reaffirmed the rating at 'AA'. The revision in the outlook by the rating agency ascertains improved business risk profile of the gas distribution major subject to sustinence of profitability, financial risk profile and liquidity.

“Gujarat Gas is expected to clock healthy growth in volumes driven by commercialisation of new geographical areas coupled with the National Green Tribunal (NGT)'s order of banning the use of coal gasifiers in Morbi (Gujarat) region over the medium term,” Crisil said in its rating rational.

The NGT order has led to migration of industrial customers, mainly ceramic tile manufacturers, from coal to piped natural gas. Morbi industrial belt has contributed peak volumes of over 4.5 million metric standard cubic meter per day (mmscmd) during April 2019, in Gujarat Gas' overall volumes, as compared to an average 2.5 mmscmd earlier. 

Sustenance of volume growth and profitability in the industrial segment is a key monitorable, Crisil said.