Valuation comfort emerges for gas firms despite demand, margin risks

Gas demand dipped in August, but upcoming LNG supply, policy targets and steady CNG growth support long-term outlook as stock valuations turn more attractive

Demand for gas was down 1.2 per cent year-on-year (Y-o-Y) in August and down 1 per cent Y-o-Y in Q2FY26TD (Jul-Aug’25). Asian spot LNG prices remained elevated at $11/mmbtu or 17 per cent of Brent (compared to historical average of 12 per cent of Brent), due to EU demand.

 

This is a concern for all gas companies, particularly city gas distributors (CGDs) like Gujarat Gas (with 20-30 per cent dependency on spot LNG) and it could impact volumes for Petronet LNG, GAIL and Gujarat State Petronet. There’s likely to be moderation in spot LNG prices in the medium to