Prabhudas Lilladher's research report on Gujarat Gas
Gujarat Gas (GUJGA) reported decline of 19% YoY and 5% QoQ in total sales volume to 8.9mmscmd in Q1FY26 (PLe 9.3mmscmd). EBITDA/scm of Rs6.4 was also below our estimate of Rs7.4. EBITDA stood at Rs5.2bn (-3% YoY, +15.7% QoQ, PLe: Rs6.3bn, BBGe: Rs5.2bn) and PAT of Rs3.3bn (-1% YoY, +14% QoQ, PLe: Rs3.9bn, BBGe: Rs3.6bn). Morbi continues to face slowdown. Against vol of 9.6mmscmd in FY25, we build in 9.3mmscmd in FY26E and 10.1mmscmd in FY27E. Against EBITDA/scm of Rs5.4 in FY25, we build in Rs6 and Rs5.8 for FY26E and FY27E respectively.
Outlook
Considering 1) the ongoing poor demand of building materials and 2) economics in favor of propane vs gas, we believe that the company is richly valued, trading at 23.9x FY27 EPS of Rs18.0. Due to the correction in stock price, we upgrade the stock from ‘Sell’ to ‘Hold’ with a TP of Rs432 (earlier Rs404) based on 24x FY27 EPS.
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