Detailed Narrative
Q3 FY26 Financial Performance Overview
Gujarat Gas reported a Q3 FY26 revenue from operations of INR 3,865 crores, a decrease from INR 4,333 crores in the corresponding quarter of the previous year. Despite this, EBITDA improved to INR 502 crores in Q3 FY26, up from INR 439 crores in Q3 FY25. The EBITDA margin per SCM also saw a significant increase, reaching ₹6.5 compared to ₹5.04 in the prior year's Q3. For the nine-month period, PAT stood at INR 1,176 crores, a slight increase from INR 1,159 crores in the same period last year.
Industrial Segment Dynamics and Morbi Recovery
The industrial segment experienced a 10% sequential decline in sales volume, falling to 3.93 MMSCMD in Q3 FY26 from 4.35 MMSCMD in Q2 FY26. Specifically, Morbi volumes decreased from 2.13 MMSCMD to 1.66 MMSCMD due to propane's lower prices. However, following a price reduction of INR 4.50 per SCM effective January 1, 2026, Morbi volumes have recovered to 2.2 MMSCMD, with expectations to reach 3-3.2 MMSCMD by February/March. Non-Morbi volumes showed resilience, growing 1% QoQ to 2.25 MMSCMD and 7% YoY despite the Diwali festival.
CNG Segment Growth and Infrastructure Expansion
The CNG segment demonstrated robust performance, with sales rising 11% year-over-year. Gujarat recorded a 9% increase, while areas outside Gujarat saw a notable 22% growth. The CNG vehicle base expanded by 14% YoY to approximately 16.94 lakh by December 2025. The company is aggressively expanding its CNG infrastructure, with 78 agreements signed for FDODO (Franchisee Dealer Owned Dealer Operated) stations, and expects to connect over 10 new stations this financial year, aiming for a total of 1,000 CNG stations within the next 2-3 years.
Digital Transformation and ESG Initiatives
Gujarat Gas is undergoing a significant digital transformation, planning to expand its ERP ecosystem to integrate key business functions and implement a robust SCADA system for centralized monitoring. An advanced metering infrastructure is also planned for industrial and commercial customers to facilitate data collection and billing. The company is committed to ESG, having signed 8 new tripartite agreements for CBG purchase, bringing the total to 27. Promoting gas use has reduced CO2 emissions by 56 lakh kg/day for industrial customers and 21 lakh kg/day through CNG sales.
Gas Sourcing and Pricing Strategy
APM gas allocation saw a 51% shortfall for the priority segment, with a 64% shortfall for CNG, which was mitigated by sourcing from New Well Gas, HPHT, and spot/long-term volumes. The company reduced prices in the Morbi Ceramic segment by INR 4.50 per SCM from January 1, 2026, to narrow the price differential with propane. Management expects propane prices to increase further in February, which should improve GGL's competitiveness. The long-term strategy aims to tie up 60-70% of volumes on a long-term basis by end of 2027 to ensure stable pricing and reduce reliance on spot markets.
Corporate Restructuring and Regulatory Updates
The scheme of arrangement with the Ministry of Corporate Affairs is progressing, with the final hearing expected in February 2026 and completion anticipated by the next earnings call in May 2026, including the allotment of shares to GGL and GTL shareholders. Regarding the Delhi High Court litigation on open access guidelines for CGD, GGL has an interim protection, and the court is hearing associated regulatory matters, with a final verdict not expected in the near future.