Hold Gujarat Gas target of Rs 565 Prabhudas Lilladher

Prabhudas Lilladher's research report on Gujarat Gas

Gujarat Gas (GUJGA) reported EBITDA of Rs5.1bn (down 4% QoQ, PLe: Rs5.2bn, BBGe: Rs5bn) and adj PAT of Rs3.1bn (down 6.9% QoQ, PLe: Rs3.2bn, BBGe: Rs3bn). The company reported weak sales with volume declining 6.1% YoY and 20.3% QoQ primarily due to weak Morbi sales. EBITDA/scm improved 19.1% QoQ to Rs6.4. A couple of long term will expire in mid-2025 and the company is in discussion for securing new LNG contracts to replace these volumes.

Outlook

While volume growth guidance has been cut to 5-7% YoY, EBITDA/scm guidance has risen to Rs5-6. In line with the guidance, we build in 7% CAGR volume growth over FY25-27E and an EBITDA of Rs5.5/scm. Maintain ‘Hold’ rating with a TP of Rs565 based on 29x avg FY26-27 EPS.