Hold Gujarat Gas; target of Rs 548: Prabhudas Lilladher

Prabhudas Lilladher's research report on Gujarat Gas

Gujarat Gas (Gujga) reported an EBITDA/PAT of Rs 4bn (-19.3% QoQ, Ple: Rs 4.8bn) and Rs 2.2bn (-26% QoQ, Ple: Rs 2.7bn) respectively. Total volumes grew 26% YoY to 9.2 mmscmd, driven by 36.5% YoY recovery in industrial volumes. However, on a QoQ basis, industrial volumes declined 6.3% as customers switched to propane due to high gas costs. EBITDA/scm also declined sequentially to Rs4.8/scm. Although spot LNG prices have softened to ~US$9/mmBtu in Q4-TD, propane prices would be a key monitorable due to its competitive intensity in Morbi.

Outlook

We build in 9% CAGR volume growth over FY25-26E and estimate an EBITDA of Rs5.5/scm for FY25/26E. Maintain ‘Hold’ rating with a TP of Rs548 based on 29x FY26E EPS.

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