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Gujarat Gas: LNG price surge impact margins

News: Gujarat Gas revenue increased 43.8% YoY to Rs.3614.5 crore on account of growth in sales volume as well as realisation. Sales volume was 11.4 mmscmd, up 15.9% YoY and 14% QoQ. Gross margin declined Rs.4.2/scm YoY and Rs.4.4/scm QoQ to Rs.6.1/scm. Subsequently, EBITDA was at Rs.421 crore, down 42.6% YoY and 41.8% QoQ. PAT was Rs.249.1 crore, down 47.5% YoY and 47.7% QoQ.

Views: Gujarat Gas' results were below expectations on profitability front. While realisation increased Rs.1.3/scm QoQ, gas costs were higher by Rs.5.8/scm QoQ. Sales volume is currently at ~12 mmscmd. The company’s margins were impacted due to surge in global LNG prices and LNG prices remain at higher level during the current quarter (Q3FY22E-TD). Subsequently, the company has hiked prices to partially pass on increased costs. In the medium term, maintaining balance between volumes and margins will be key to the company's performance.