Gujarat Gas - Details on merged entity awaited: ICICIdirect

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26 Aug, 2025 12:21

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ICICIdirect.com's report on Gujarat Gas Company

- Gujarat Gas reported its Q4FY15 results, which were below our estimates due to lower volumes of 1.9 mmscmd against our estimate of 2 mmscmd

- The topline declined 29.3% YoY to Rs 545.6 crore below our estimate of Rs 605.1 crore

- Gross margin came in at Rs 7.7/scm due to lower realisations. The EBITDA margin was at 15.9% below our estimate of 19.3%

- Subsequently, PAT during the quarter increased 26.6% YoY to Rs 62.8 crore, below our estimate of Rs 80 crore

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"On April 21, 2014, Gujarat Gas announced its merger with holding company Gujarat Distribution Network (GDNL). GSPC Gas, another CGD company of GSPC Group, may merge with GDNL. The other two companies that will merge with GDNL are GFSL & GTCL. Although the company has divulged the swap ratios, in the absence of financials of the unlisted companies’ clear modalities of the scheme of arrangement, we have not taken it in our assumption. However, once the merger is completed, the company will become the largest CGD player with its volume in the range of 7-8 mmscmd. However, on the flip side, post merger the company will not remain a debt-free company. Although the long term story of the company looks good, as it will become the largest CGD player, near term concerns over volume growth remain. We have kept the stock under review and will revisit the ratings after the merger process is completed and consolidated financials are published", says ICICIdirect.com research report.

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