Gujarat Gas Limited , India's largest city gas distribution company, reported a mixed performance for the second quarter, with flat revenue growth and a decline in profitability amid challenges in the Morbi industrial segment.

Financial Highlights

Gujarat Gas reported Q2 revenue of ₹3,979.00 crores, a marginal increase from ₹3,949.00 crores in the same period last year. However, the company's profitability metrics showed a decline:

Operational Performance

The company's performance was marked by contrasting trends across different segments:

• Industrial Segment: Overall volumes fell by 8% to 4.34 MMSCMD (Million Metric Standard Cubic Meters per Day).
• Morbi Cluster: Volumes declined from 2.51 MMSCMD in Q1 to 2.13 MMSCMD in Q2, primarily due to competition from propane.
• CNG Segment: Showed strong growth of 13% year-over-year, with Gujarat recording an 11% increase and areas outside Gujarat delivering a notable 26% growth.
• Domestic PNG: Added approximately 42,400 new connections during the quarter.

Market Dynamics and Challenges

Gujarat Gas faces ongoing challenges in the industrial segment, particularly in the Morbi cluster, due to competition from propane. The company's management noted that the current price differential between natural gas and propane is in the range of ₹4.00 to ₹6.00 per SCM, with propane being cheaper.

Despite these challenges, the company maintains a baseline volume of 1.7 to 1.8 MMSCMD in Morbi, with over 200 customers exclusively using natural gas due to quality and operational heat requirements.

Future Outlook

Gujarat Gas remains cautiously optimistic about its future prospects:

1. Volume Guidance: The company expects volumes to range between 9-10 MMSCMD for the near term, depending on the competitiveness of natural gas prices against propane.
2. EBITDA Margin Guidance: Management maintains its guidance of ₹4.50 to ₹5.50 per SCM.
3. Capital Expenditure: Plans to invest approximately ₹800.00 crores in gas infrastructure for the full financial year.
4. Merger Progress: The company expects approval of the composite scheme of arrangement, which aims to eliminate the layered structure of the GSPC group and promote business synergy.

Strategic Initiatives

To address the challenges in the industrial segment, Gujarat Gas is exploring several strategic initiatives:

1. Propane Business Entry: The company is in advanced discussions with capacity providers, fleet operators, and international propane suppliers to enter the propane market.
2. Competitive LNG Sourcing: Efforts are underway to source competitively priced LNG with a target slope of around 12% or lower to Brent crude prices.
3. Infrastructure Expansion: Continued focus on expanding CNG infrastructure and upgrading existing facilities to promote clean fuel usage.

As Gujarat Gas navigates through a challenging market environment, the company's diversified portfolio and strategic initiatives may help in maintaining its market leadership position in the city gas distribution sector. However, the near-term performance will largely depend on the dynamics of global gas prices and the company's ability to remain competitive against alternative fuels.

Gujarat Gas Limited , India's largest City Gas Distribution (CGD) company, has outlined an ambitious growth strategy while reporting its financial results for the second quarter of fiscal year 2026.

Growth Strategy

The company has set its sights on achieving double-digit volume Compound Annual Growth Rate (CAGR) over a three-year period. This growth plan focuses on several key areas:

1. Volume Recovery: Gujarat Gas aims to boost volumes across its industrial and Piped Natural Gas (PNG) segments.

2. Infrastructure Expansion: The company is investing in expanding its gas infrastructure to support growth.

3. CNG Station Network: Gujarat Gas is actively developing its Compressed Natural Gas (CNG) station network.

4. Cost Efficiency: The company is focusing on cost optimization measures to sustain margins.

5. LNG Contract Optimization: Gujarat Gas plans to optimize its long-term Liquefied Natural Gas (LNG) contracts.

Q2 FY26 Financial Highlights

For the quarter ended September 30, 2025, Gujarat Gas reported the following financial results:

Operational Performance

Gujarat Gas demonstrated strong growth in its CNG and PNG segments:

• CNG Volume: 3.32 mmscmd in Q2 FY26, up 13% from 2.93 mmscmd in Q2 FY25.
• PNG (Domestic) Volume: 0.83 mmscmd in Q2 FY26, a 10% increase from 0.76 mmscmd in Q2 FY25.
• PNG (Commercial) Volume: 0.16 mmscmd in Q2 FY26, up 7% from 0.15 mmscmd in Q2 FY25.

Expansion Initiatives

Gujarat Gas is expanding its CNG network through the Fully Dealer Owned Dealer Operated (FDODO) model:

• The company has signed approximately 74 FDODO agreements with various dealers.
• During Q2 FY26, one FDODO station became operational in Jamnagar, with more stations set to open soon.

Corporate Developments

The company reported progress on its Composite Scheme of Amalgamation and Arrangement:

• A meeting of equity shareholders was held on October 17, 2025, as directed by the Ministry of Corporate Affairs.
• Shareholders approved the scheme with a significant majority.
• Gujarat Gas has filed the Chairman's Report and Confirmation petition with the Ministry of Corporate Affairs.

As India's leading CGD company, Gujarat Gas continues to focus on expanding its infrastructure and customer base. The company currently operates 834 CNG stations and provides natural gas to over 23.44 lakh households across six states and one union territory.

Gujarat Gas's strategic focus on volume growth, infrastructure expansion, and operational efficiency positions it well to capitalize on the growing demand for natural gas in India's energy market.