Prabhudas Lilladher's research report on Gujarat Gas
Our channel checks in Morbi suggests that 1) Gujarat gas (GGAS) gas sales volumes have nearly doubled from Q3FY23 lows of ~2mmscmd as gas prices have become cheaper to competing propane by Rs0.5-1/scm, however, industrial gross margins are likely to be at ~Rs2.7/scm 2) 85% of players have dual fuel (propane/GGas) capacity and they switch for cheaper option daily 3) dealer off-take of ceramic products remain low, due to high price volatility 4) domestic demand remains sluggish, while export growth is healthy due to falling gas and freight cost.
Outlook
We maintain our volumes and earnings for GGAS and expect high competition to keep margins/volumes in check. Maintain ‘HOLD’ with DCF based PT of Rs450 (unchanged).
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