Gujarat Gas — Q4 FY25 earnings call

Call held 21 May 2025

Management summary

Gujarat Gas delivered a resilient performance in FY25 despite challenges in the industrial segment and reduced APM gas allocations. While industrial volumes in the Morbi cluster faced headwinds from cheaper propane alternatives, the CNG segment showed robust double-digit growth, reaching record highs. Management is aggressively pursuing a merger with GSPC/GSPL to streamline sourcing and expects completion by late 2025.

Highlights

  • Revenue from operations stood at ₹4,289 crores for Q4 FY25, a marginal decline from ₹4,294 crores YoY.

  • EBITDA for the quarter was ₹524 crores, down 15.7% from ₹622 crores in the previous year's corresponding quarter.

  • Profit After Tax (PAT) for Q4 FY25 reported at ₹287 crores compared to ₹410 crores YoY.

  • Overall sales volume for FY25 reached 9.62 mmscmd, representing a 3% increase over the previous financial year.

  • CNG volumes hit an all-time high of 3.56 mmscmd in Q4, with overall CNG segment growth of 12% annually.

  • Industrial volumes in Morbi declined to 2.87 mmscmd in Q4 from 3.35 mmscmd in Q3 due to propane price competition.

  • EBITDA margin per scm stood at ₹6.25 for the quarter, compared to ₹7.06 in Q4 FY24.

  • Board recommended a dividend of ₹5.82 per share (291% of face value) for FY25.

Concerns

  • Propane Price Competition

  • APM Allocation Reduction

Key financials

  1. Revenue ₹4,289 Cr -0.12%YoY
  2. EBITDA ₹524 Cr -15.8%YoY
  3. PAT ₹287 Cr -30%YoY
  4. EBITDA Margin per SCM ₹6.25 -11.5%YoY
  5. Annual EBITDA ₹2,090 Cr +5.3%YoY

What they filed

Q1 FY27: revenue up 63.1%, net profit up 84.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,782 4,153 4,102 5,851 3,780 −0%3,658 −12%5,792 +41%9,545 +63%
EBITDA514 380 450 837 447 −13%447 +18%609 +35%1,381 +65%
Net profit309 221 288 547 280 −9%267 +21%152 −47%1,007 +84%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Industrial
    5.03 mmscmd Sales Volume-7% QoQ Volume Growth2.87 mmscmd Morbi Volume
  • CNG
    3.56 mmscmd Sales Volume12% Annual Growth₹15.4 lakh Vehicle Base
  • Domestic
    ₹22.6 lakh Commissioned Customers₹1.51 lakh Annual Additions

Guidance & targets

Capex

  • Annual Capex Guidance Capex · FY26 · High confidence ₹1,000 crores

    Previously ₹742 crores → ₹1,000 crores

    Yes, we will be doing capex close to INR1,000 crores. That's the approximate guidance.

    — Management

Volume

  • CNG Volume Growth Volume · FY26 · High confidence 12%
    I think we'll go by the same guidance for the growth, which I think we are maintaining a growth of 12%, and that growth will still continue in this financial year also.

    — Management

Margin

  • EBITDA Margin Guidance Margin · FY26 · Medium confidence 4.5% to 5.5%
    So similar, 4.5% to 5.5% is what we're maintaining, right? Management: Yes.

    — Management

Capacity

  • CNG Station Additions Capacity · FY26 · Medium confidence 70
    I think we will be managed to add around 70 stations this year.

    — Management

Other

  • Merger Completion Timeline Other · FY26 · Medium confidence September / October 2025
    The current time line which we are envisaging for completing the entire scheme and get a final MCA order somewhere around September / October 2025.

    — Management

Risks & concerns

  • Propane Price Competition

    high

    Propane is currently ₹3.5-3.7 cheaper per scm than PNG, leading to a 7% QoQ decline in industrial volumes.

    Both acknowledged

  • APM Allocation Reduction

    high

    APM allocation has dropped from 2.3 mmscmd in Q4 to approximately 2 mmscmd currently, increasing reliance on costlier spot gas.

    Management acknowledged

  • Open Access Regulation

    medium

    Potential for third-party LNG suppliers to enter Morbi area; management is currently protected by a favorable interim court order.

    Analyst deflected

Areas of evasion (1)

  • Specific split of short-term sourcing between HPHT, IGX, and Spot was not provided granularly.

Q&A highlights

3 direct
Sourcing Mix and APM Allocation Direct
Basically, 25% of the gas which has come in from the APM... long-term contracts contributing close to 35% of 9.38 mmscmd and the short-term contracts... close to 40%.

Reveals the company's heavy reliance on short-term/spot markets (40%) following the reduction in cheaper APM gas allocations.

Asked by Probal Sen, ICICI Securities

Propane vs PNG Pricing in Morbi Direct
The prevailing propane price is close to INR43, the landed price per scm and our gas price is close to INR46.55. So the difference is close to INR3.5, INR3.7 per scm.

Quantifies the significant price disadvantage GGL faces in its largest industrial cluster, explaining the volume shift to alternate fuels.

Asked by Amit Murarka, Axis Capital

Merger Synergies and Tax Benefits Direct
The scheme is affected from 1st April 2024. So all the returns, etc will be we need to refile the returns, etc. So we'll get that benefit.

Confirms that the merger benefits will be retrospective from April 2024, potentially leading to significant tax write-backs or adjustments.

Asked by S. Ramesh, Nirmal Bang Equities

2 min read 5 chapters

Detailed narrative

CNG Segment Reaches Record Highs

The CNG segment emerged as the primary growth engine for Gujarat Gas in Q4 FY25, reaching an all-time high sales volume of 3.56 mmscmd. Overall CNG sales across all regions rose by 12% annually, supported by an 18% growth in the CNG vehicle base to 15.4 lakh vehicles. Management expects this momentum to continue, guiding for 12% volume growth in FY26 and planning to add approximately 70 new CNG stations under the FDODO scheme.

Industrial Headwinds in Morbi Cluster

Industrial volumes faced significant pressure, declining 7% QoQ to 5.03 mmscmd. The reduction was primarily concentrated in the Morbi ceramic cluster, where average volumes fell to 2.87 mmscmd from 3.35 mmscmd in Q3. This shift was driven by a ₹3.5-3.7 per scm price disadvantage compared to propane. Management noted that while spot LNG prices have corrected slightly, propane remains the more competitive fuel for industrial users in the current environment.

Sourcing Strategy Amidst APM Cuts

The company is navigating a challenging sourcing environment following a reduction in APM gas allocations. In Q4, APM gas accounted for only 25% (2.3 mmscmd) of the sourcing mix, while short-term and spot contracts rose to 40% (3.77 mmscmd). Current APM allocation has further dipped to ~2 mmscmd. To mitigate this, GGL is negotiating long-term contracts with GSPC, aiming for pricing linked to Brent/Henry Hub to provide a natural hedge against propane price volatility.

Strategic Merger and Corporate Restructuring

The proposed composite scheme of arrangement involving GSPC, GSPL, and Gujarat Gas is progressing through regulatory channels. Management expects the merger to be completed by September or October 2025. The merger is anticipated to eliminate layered structures, unlock value, and provide retrospective tax benefits from April 1, 2024. It will also integrate the gas trading business directly into Gujarat Gas, strengthening its sourcing capabilities.

Capex and ESG Initiatives

Gujarat Gas invested ₹742 crores in infrastructure during FY25 and has significantly raised its capex guidance to ₹1,000 crores for FY26. On the ESG front, the company successfully completed a hydrogen blending pilot project at 8% and has initiated actions to increase this to 15%. Additionally, the company is aggressively digitizing operations through SCADA, ERP, and GIS systems to enhance operational efficiency and predictive maintenance.

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