Gujarat Gas Limited , India's largest city gas distribution company, reported mixed results for the first quarter, with revenue declining but EBITDA showing a slight improvement. The company also announced its entry into the propane distribution business, aiming to diversify its energy offerings.

Financial Performance

Gujarat Gas reported revenue from operations of Rs 4,065.00 crores for Q1, down from Rs 4,615.00 crores in the corresponding quarter of the previous year. Despite the revenue decline, the company managed to maintain its profitability:

• EBITDA stood at Rs 579.00 crores, marginally up from Rs 574.00 crores year-over-year
• Profit after tax was Rs 327.00 crores, slightly lower than Rs 330.00 crores in the same quarter last year
• EBITDA margin per SCM improved to Rs 7.17 from Rs 5.75 in the previous quarter

Operational Highlights

The company faced challenges in its industrial segment but saw strong growth in CNG sales:

• Industrial segment volumes decreased by 6% to 4.71 MMSCMD
• Morbi volumes declined from 2.87 MMSCMD to 2.51 MMSCMD due to customers shifting to propane
• CNG segment showed robust performance with 12% year-over-year growth in sales volumes, reaching 3.72 MMSCMD
• Added approximately 36,000 new domestic connections
• Commissioned 3 new CNG stations during the quarter

Strategic Initiatives

Gujarat Gas announced two significant strategic moves:

1. Entry into propane and LPG sourcing and sales business, targeting 25% of the Morbi propane market
2. Board approval to undertake sourcing and sale of propane and LPG to industrial customers

These initiatives aim to position Gujarat Gas as a total energy solution provider and diversify its offerings to meet customer needs.

Future Outlook

The company provided guidance on its financial and operational expectations:

• Projected annual CAPEX of Rs 800.00-1,000.00 crores
• Estimated EBITDA margins of Rs 4.50-5.50 per SCM for the financial year
• Plans to add more CNG stations under the FDODO (Franchise-Owned Dealer-Operated) scheme

Gujarat Gas remains optimistic about its CNG business growth, expecting to add a double-digit number of CNG stations before December under the FDODO scheme.

Market Dynamics

The company is navigating a challenging environment in the Morbi region, where some customers have shifted to propane due to price differentials. However, Gujarat Gas expects the natural gas demand to normalize in the medium to long term, citing upcoming increases in global LNG supplies that could lead to more competitive pricing.

As Gujarat Gas expands its energy portfolio and continues to invest in infrastructure, it aims to strengthen its position as a leading player in India's growing natural gas market while adapting to evolving customer needs and market conditions.

Gujarat Gas Limited (GGL), a leading natural gas distribution company, has reported a significant increase in profitability for the first quarter, despite a slight decline in revenue. The company's financial results, approved by its Board of Directors on August 5, reveal a mixed performance with improved bottom-line figures.

Quarterly Financial Highlights

GGL's net profit for Q1 stood at ₹327.00 crore, marking a substantial 14% increase from ₹287.00 crore in the previous quarter. This profit growth is particularly noteworthy given the challenging market conditions and a marginal decrease in revenue.

The company's revenue from operations for Q1 was ₹4,065.00 crore, down from ₹4,289.00 crore in the previous quarter, representing a 5.2% quarter-on-quarter decline. Despite this top-line contraction, GGL managed to improve its profitability through effective cost management and operational efficiencies.

Operational Performance

Gujarat Gas demonstrated strong operational performance, particularly in its CNG (Compressed Natural Gas) segment. The company achieved its highest-ever CNG volume of 3.33 mmscmd (million metric standard cubic meters per day) in Q1, up from 3.22 mmscmd in the previous quarter, reflecting a robust 3.4% growth.

The company's domestic PNG (Piped Natural Gas) customer base continued to expand, with over 35,000 new connections added during the quarter. GGL now provides natural gas to more than 23.02 lakh households across six states and one union territory.

Financial Metrics

GGL's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for Q1 reached ₹579.00 crore, an 11% increase compared to ₹524.00 crore in the previous quarter. This improvement in EBITDA margin indicates the company's ability to manage costs effectively and maintain operational efficiency.

Business Development Initiatives

In a strategic move to diversify its energy portfolio, the Board of Directors has approved plans for Gujarat Gas to undertake sourcing and sale of Propane/LPG to industrial customers. This initiative aligns with the company's commitment to providing comprehensive energy solutions and strengthens its position as a total energy solution provider.

Future Outlook

Gujarat Gas continues to focus on expanding its CNG network, with plans to accelerate growth through the FDODO (Franchise-Owned Dealer-Operated) model. The company has already signed agreements with approximately 69 dealers, which is expected to boost its market presence and service delivery.

Milind Torawane, IAS, Managing Director of Gujarat Gas Limited, commented on the results, stating, "Our Q1 performance demonstrates the resilience of our business model and our ability to drive profitability even in challenging market conditions. The growth in CNG volumes and the expansion of our customer base reflect the strong demand for clean energy solutions. Our venture into Propane/LPG supply for industrial customers is a strategic step towards becoming a comprehensive energy provider."

As Gujarat Gas continues to navigate the dynamic energy market, its focus on operational excellence, customer base expansion, and diversification of energy offerings positions the company for sustained growth in the coming quarters.

Note: All figures are in Indian Rupees (₹) and 'crore' denotes 10 million.