Gujarat Gas hits new high; rallies 32% in four weeks on healthy Q4 results

Shares of Gujarat Gas Company continued their upward journey, hitting a new high of Rs 674.80 after they advanced 6 per cent on the BSE in intra-day trade on Thursday. In the past four weeks, the stock of the integrated oil and gas firm has rallied 32 per cent after the company reported a strong set of numbers for the quarter ended March (Q4FY21). In comparison, the S&P BSE Sensex is up 5.6 per cent during the same period.

"Gujarat Gas reported a beat on our numbers, driven by better than-estimated EBITDA/scm (Rs 5.1) and volume growth (up 22 per cent YoY to 12.1mmscmd). Morbi volumes stood at 7.3 mmscmd (up 33 per cent YoY), while compressed natural gas (CNG) achieved highest ever quarterly volumes. Pivotal was addition of 150 new CNG stations in FY21 totaling to 559 CNG outlets (v/s IGL’s 573 stations)," analysts at Motilal Oswal Financial Services said in a post-results update.

In Q4FY21, Gujarat Gas reported a 28.6 per cent year on year increase in revenue at Rs 3,429 crore as sales volume jumped 22 per cent YoY to 12.1 mmscmd. Profit after tax (PAT) increased 42.3 per cent YoY to Rs 350 crore. Ebitda (earnings before interest, taxes, depreciation, and amortization) rose 29.9 per cent YoY at Rs 554 crore on account of better operating leverage.

The company's gas sales volume has shown a robust growth trajectory during the quarter under review. The company's average gas sales volume for the quarter was at 12.13 mmscmd, up by 22 per cent compared to corresponding quarter previous year. ln the industrial and CNG category, the gas sales volume grew by 24 per cent and 16 per cent, respectively compared to corresponding quarter previous year, and 5 per cent and 11 per cent respectively compared to the previous quarter.

The management said the restrictions imposed to curb the outbreak of recent Covid-19 wave had an impact in the natural gas demand mainly from CNG, industrial and commercial categories. As restrictions are being lifted gradually in many of company's operating areas, natural gas demand is likely to improve. The company's gas sales volume till date in the FY22 stands close to 10 mmscmd as against average gas sales of 9.39 mmscmd in FY21, it said.

"Any directive launched as a pollution control measure, or the impetus on growing gas consumption in India, would greatly benefit Gujarat Gas (v/s the other two incumbents – IGL and MAHGL – that have been under the purview of stricter norms/impetus since 2001 and prior). It would be the biggest beneficiary of any directive on Green Tax by Ministry of Road Transport and Highways (MoRHT)– as Gujarat thus far has no government directive on the use of CNG. Once gas is included under GST, GUJGA would benefit from increased volume offtake – as industrial consumers would be able to take input tax credits, thus lowering their gas feedstock cost," the brokerage firm said.