Gujarat Gas Limited has received a credit rating reaffirmation from CRISIL Ratings Limited, maintaining its top-tier 'CRISIL AAA/Stable' rating on long-term bank facilities worth Rs 3,350 crore. The rating agency published its rationale on March 9, 2026, highlighting the company's strong market position and financial stability.

Rating Reaffirmation Details

CRISIL Ratings has maintained its confidence in Gujarat Gas's creditworthiness, citing the company's robust business risk profile and strong financial metrics. The rating reflects the anticipated benefits from the ongoing merger with Gujarat State Petroleum Corporation (GSPC), Gujarat State Petronet Ltd (GSPL), and GSPC Energy Ltd (GEL).

Business Performance and Market Position

Gujarat Gas operates as India's largest CGD player by gas sales volume, commanding approximately 25% market share. The company maintains 27 CGD licences across 44 districts in six states and one Union Territory, serving over 23 lakh domestic connections, 833 CNG stations, and close to 4,400 industrial units as of December 31, 2025.

However, operational performance faced challenges in fiscal 2026, with volumes declining to 8.63 mmscmd in nine months compared to 9.73 mmscmd during the same period in the previous fiscal. This decline primarily resulted from reduced demand in Morbi clusters due to increasing premium of natural gas over propane.

Financial Strength and Liquidity

The company demonstrates superior liquidity with cash and bank balances exceeding Rs 1,500 crore as of March 31, 2025, compared to Rs 916 crore in the previous year. Both Gujarat Gas and GSPC maintain debt-free balance sheets, with annual cash accruals expected to exceed Rs 1,000-1,100 crore, sufficient to fund projected capital expenditure of Rs 800-1,000 crore.

Merger Synergies and Strategic Outlook

The pending merger with GSPC, India's second-largest gas trading company, is expected to create significant synergies. GSPC's trading business generated revenues of Rs 12,200 crore in nine months of fiscal 2026, though this represents a decline from Rs 15,600 crore in the corresponding previous period. The merger awaits the final order from the Ministry of Corporate Affairs following a hearing held on February 18, 2026.

Post-merger, the transmission business will be demerged and listed separately as Gujarat Transmission Ltd (GTL) within the next 6-7 months. The combined entity will benefit from GSPC's extensive sourcing agreements and infrastructure access, with 60-70% of Gujarat Gas's current sourcing already done through GSPC.

Risk Factors and Challenges

Despite the positive rating, CRISIL identified several monitorable factors:

• Supply chain risks: Potential disruptions from Middle East conflicts affecting gas supplies from Qatar and other regional sources
• Volume pressures: Continued impact of natural gas premium over alternative fuels in price-sensitive industrial segments
• Regulatory exposure: Ongoing risks related to gas pricing mechanisms and policy changes
• Geographic expansion: Project execution risks in newer geographical areas awarded under recent licensing rounds

The rating agency noted that any material expansion or investment leveraging the combined balance sheet will remain under close monitoring, though management has appointed external consultants to evaluate new business opportunities.

Market Leadership and Diversification

Gujarat Gas's diversified customer profile provides revenue stability across multiple segments. The company has demonstrated resilience in maintaining EBITDA per scm at Rs 5.5-6.0 range despite volatile input costs. CNG and non-Morbi PNG industrial and commercial segments showed volume improvements, supported by expanding infrastructure.

The stable outlook reflects CRISIL's confidence in the merged entity's ability to maintain its market-leading position with robust operating performance, backed by healthy volume growth potential and stable realization levels in the medium term.

Gujarat Gas Limited has issued Force Majeure notices to its industrial customers, restricting gas supply quantities due to severe constraints in R-LNG availability caused by the ongoing war in the Middle East region. The company filed this regulatory intimation on March 4, 2026, under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Force Majeure Implementation Details

The Force Majeure notices have been issued to industrial customers in accordance with the provisions of existing Gas Supply Agreements. The restrictions on Daily Contracted Quantity became effective from March 6, 2026.

Supply Chain Impact

The company attributed the supply constraints to the recent ongoing war in the Middle East region, which has significantly impacted the gas supply scenario. The availability of R-LNG (Re-gasified Liquefied Natural Gas) has become severely constrained due to these geopolitical developments.

Insurance and Financial Implications

Gujarat Gas Limited disclosed that Acts of War are not covered under the company's insurance policies. The company stated that the likely impact of this Force Majeure event, which is currently ongoing, cannot be estimated at this point in time.

Regulatory Compliance and Monitoring

The company has committed to closely monitoring the developments in the Middle East region and their impact on gas supply chains. Gujarat Gas Limited will keep both BSE Limited and National Stock Exchange of India Ltd informed of any material updates regarding this situation as it evolves.