Detailed Narrative
Industrial Segment: The Morbi-Propane Challenge
Industrial volumes saw a 6% QoQ decline to 4.71 MMSCMD, primarily driven by the Morbi cluster where volumes dropped from 2.87 MMSCMD to 2.51 MMSCMD. This shift is attributed to a significant price differential, with propane currently enjoying a ₹4 per SCM advantage over natural gas. Management expects Q2 volumes in Morbi to remain subdued in the 2.3-2.5 MMSCMD range due to the Janmashtami festival and general slowdown.
Strategic Pivot: Entry into Propane and LPG
In a major strategic shift, Gujarat Gas's Board approved the sourcing and sale of propane and LPG to industrial customers. The company aims to capture 25% of the Morbi propane market (estimated at 1.67 lakh metric tons per month) by the end of the financial year. This asset-light model involves no major CAPEX, utilizing existing terminal capacities and leveraging GSPC's international sourcing strength to offer a 'total energy solution' to customers.
CNG Segment: Record Performance and Expansion
The CNG segment was a standout performer, reaching a record sales volume of 3.72 MMSCMD, a 12% YoY increase. Growth was particularly strong outside Gujarat at 27%. The company is aggressively expanding its infrastructure, with plans to add double-digit stations under the FDODO (Franchisee Owned, Dealer Operated) scheme by December 2025, supported by a growing vehicle base of 15.65 lakhs.
Sourcing Dynamics and APM Shortfall
Gujarat Gas faces a challenging sourcing environment, receiving only 51% of its priority sector gas requirements from low-cost APM sources. The shortfall is met through a mix of New Well Gas, HPHT Gas (0.7 MMSCMD in Q1), and expensive spot/long-term contracts. Currently, the sourcing mix stands at 38% long-term, 34% short-term, and the remainder from domestic sources.
Financial Outlook and Margin Guidance
Despite achieving a high EBITDA per SCM of ₹7.17 in Q1, management maintained a conservative full-year guidance of ₹4.5 to ₹5.5 per SCM. This caution stems from uncertainties in Q2 due to festivals and the need to reduce prices to remain competitive against propane. The company plans a robust CAPEX of ₹800-₹1,000 crores for FY26 to strengthen its gas network and digital infrastructure.