Gujarat Gas Ltd

Rating action

• CARE reaffirmed GEL's long-term/short-term bank facilities at CARE AAA; Stable / CARE A1+.
• Facility size: ₹12,836 crore (fund-based/non-fund-based).
• Scheme completion: merger with GSPC/GSPL/GSENLI; demerger of transmission; renamed GEL (May 1, 2026).

Instruments & ratings

• Instrument: Fund-based/Non-fund-based LT/ST bank facilities; Regulator RBI; Rating: CARE AAA; Stable / CARE A1+.

Rationale & drivers

• Integrated presence across CGD, gas trading, power, E&P, and regasification; strong market position.
• FY26 revenue ₹23,614 crore; PBILDT ₹3,087 crore; PAT ₹1,678 crore.
• Net debt negative; cash ₹6,393 crore; total debt ₹3,243 crore; liquidity robust.
• GoG stake 55.96%; diversified gas sourcing; dominant CGD/gas trading position.
• TD/EBITDA ~1.0x; annual capex ₹1,000-1,100 crore funded by internal accruals.
• Gas-price/regulatory risks; pass-through ability and MWP risk.

Outlook & changes

• Outlook: Stable.
• Scheme completion details: merger completed May 1, 2026; GEL renamed.

Liquidity & governance

• Free cash ₹6,393 crore; undrawn limits ₹1,363 crore; gearing 0.17x.
• Board has four independent directors out of seven.

Rating sensitivities

• Negative factors: large debt-funded capex leading to Net debt/PBILDT >1x; regulatory developments; MWP delays/penalties.

Dividend and TDS update

• Board recommended a dividend of Rs 8.90 per equity share for FY ended 31 March 2026.
• Dividend payable subject to shareholders' approval at the upcoming AGM.
• Company to withhold tax at source on dividend under IT Act 2025.
• Shareholders must update PAN, category, residency, and email before record date.
• Two-day post-record-date deadline to submit required forms via KFin/online form.
• Resident TDS typically 10%; NIL with Form 121 in select cases.
• Non-residents: 20% or treaty-rate with documentation.
• Declaration under IT Rules 2026 Rule 203 required two days post record date.

KYC updation for physical shareholders

• Gujarat Energy requests physical shareholders to furnish PAN, KYC, bank details, and signature updates.
• Non-updated accounts may have dividends/interest paid electronically from 1 April 2024.
• Forms ISR-1, ISR-2, ISR-3 and SH-13/SH-14 are required for updating PAN, KYC, and Nomination.
• RTA: KFin Technologies Limited; submit documents to Gujarat Energy or RTA as instructed.
• Nomination optional; e-mail registration encouraged for smooth transmission.
• Forms and instructions available on company website and RTA portal.
• Submission modes: in person, post, or e-sign; no affidavits required.

Financial Performance

• Revenue from operations: INR 9,670 crores in Q1 FY27; vs INR 5,924 crores prior year.
• EBITDA: INR 1,482 crores in Q1 FY27; vs INR 896 crores prior year.
• PAT: INR 998 crores in Q1 FY27; vs INR 561 crores prior year.
• Total sales volume: 15.66 mmscmd; gas trading 12.22 mmscmd; CGD 12.34 mmscmd.
• Intercompany sales: 8.9 mmscmd; external sales: ~3.32 mmscmd; net total 15.66 mmscmd.
• Pipeline network: ~45,900 km across six states and 1 union territory.
• CGD infra capex: INR 127 crores invested in the quarter.
• CO2 reductions: PNG industrial 1.07 crore kg/day; CNG 21 lakh kg/day.

Operating Update

• Morbi cluster: average volume 5.67 mmscmd in Q1 FY27; Morbi volume up 181% QoQ.
• Morbi May-Jun gas volumes ~3.0 mmscmd; propane ~5.3–5.4 mmscmd equivalent.
• Propane sourcing; future plans for own propane import terminal near Morbi.
• Gas-sourcing mix: 12.34 mmscmd CGD; 8.9 mmscmd intercompany; remainder external.
• CNG volumes grew ~13% YoY to 3.76 mmscmd; CGD Gujarat 3.33 mmscmd prior year quarter.
• CNG stations: 844 total; 6 new and 9 upgraded in Q1 FY27.
• PNG connections: ~59,000 new domestic connections in quarter; total domestic PNG > 24.77 lakh households.
• Domestic PNG connections Jan–Jun 2026: ~91,000; commercial PNG connections > 1,000.
• PNG Industrial volume: 0.17 mmscmd; Morbi remains largest partner in PNG industrial.

Balance Sheet and Cash

• Cash on balance sheet: ~INR 7,200 crores as of quarter end.
• CGD capex guidance: roughly INR 1,000 crores for CGD segment.
• Pipeline and asset base expanding; focus on strengthening existing business and pipelines.

Projects and Capex

• Propane infrastructure: plans for own import/storage facility near Morbi; sites shortlisted in Gujarat.
• GSPL Transmission listing: expected towards early September; exemption needed; regulator coordination ongoing.
• Propane terminal studies ongoing; capex timing to be shared with detailed project reports.

Q&A Highlights

• Total Q1 volume 15.66 mmscmd; CGD 12.34 mmscmd; intercompany 8.9 mmscmd; external ~3.32 mmscmd.
• Morbi: current run-rate ~3 mmscmd gas; propane ~5.3–5.4 mmscmd; propane price ~65 Rs/scm vs gas ~78 Rs/scm.
• Gas trading margins guided at ~4–5%; no near-term reversals expected; maintain guidance.
• Gas trading profit guidance reaffirmed: ~INR 1,100–1,200 crores for FY27.
• Long-term LNG sourcing: ~28% term contracts; ~2 million t LNG equivalent on term basis; target ~4 million t by 2030.
• Non-Morbi industrial growth: adding new industries; 86 new industries added in non-Morbi regions; volumes to rise with infra.
• CMX/industrial strategy: exploring multiple options including power off-take deals; PLFs low for gas-based plants recently.

Guidance and Outlook

• Gas trading: target net profit INR 1,100–INR 1,200 crores for FY27 (reaffirmed).
• CGD capex guidance: around INR 1,000 crores; timing to be clarified for FY27–FY28.
• LNG contracting: seek higher long-term volumes; expect improved profitability with term contracts.
• GSPL listing: timeline targeted for early September 2026; regulatory exemptions in process.

Risks and Watchpoints

• Geopolitical shocks affecting LNG/propane prices and supply dynamics.
• Propane infrastructure rollout and timing; availability of infrastructure near Morbi.
• Industrial demand and domestic/regulatory push for gas usage; competition from alternatives.

Reclassification filing

• GSEG reclassification from Promoter to Public Shareholder status applied on 13 August 2026.
• Application submitted to NSE and BSE seeking no objection/approval.
• Earlier intimations dated 3 August and 11 August 2026 referenced the proposal.

Meeting Details

• Date: 19 August 2026.
• Type/Mode: Group and one-to-one meetings; Virtual.
• Event: Goldman Sachs India Energy Security & Grid Resilience Virtual Corporate Day.
• Company participants: Officials from Gujarat Energy Limited.
• Investor participants: Group of Analysts/Investors.
• Purpose: Investor interaction on energy security and grid resilience.

Meeting Details

• Date and time: 12 August 2026, 4:00 PM IST.
• Type and mode: group conference call, virtual audio format.
• Event/organiser: post-results earnings conference call with analysts (Q1 FY 26-27).
• Purpose: earnings results discussion with analysts.

Participants

• Key company participant: Company Secretary.
• Other management participants not disclosed in the filing.

Purpose

• Scope: earnings discussion with analysts for Q1 FY 26-27.

Additional Notes

• Audio recording of the conference call will be available.
• Link to recording provided in filing.

Business Overview

• Post-scheme GEL is an integrated natural gas company across E&P, Gas Trading, CGD, and Renewables.
• Renamed from Gujarat Gas Limited; Scheme completed; MCA approval and effective May 2026.
• Strategic expansion along energy value chain positions GEL as a diversified energy company.

Operational Highlights

• Morbi ceramic gas supply ensured during Middle East crisis; volumes rose to 8.0 MMSCMD.
• CGD volume 12.34 MMSCMD; GEL total 15.66 MMSCMD.
• 6 new CNG stations added; total 844 stations.
• 10 LNG cargoes sourced in Q1 FY27; prior year 6.
• D-PNG connections ~91,000; +1,000 C-PNG under PNG Drive.
• Debt-free balance sheet with cash reserves of ₹7,000+ Cr (Gas Trading).
• Renewable wind capacity 123.9 MW across 5 farms; 79 WTGs.

Financial Performance

• Q1 FY27 revenue ₹9,670 Cr; EBITDA ₹1,482 Cr; PAT ₹998 Cr.
• CGD and GEL volumes: Q1 FY27 CGD 12.34 MMSCMD; total GEL volume 15.66 MMSCMD.
• Debt-free balance sheet; cash reserves ~₹7,000 Cr.

Capital Structure & Liquidity

• Scheme completed; GEL renamed; GTL demerger; GTL listing in progress.
• Credit ratings: AAA Stable / A1+ from CRISIL CARE and India Ratings.
• Market cap ~₹30,684 Cr as of 30 June 2026.
• Share exchanges: 305:10 GGL:GSPC; 13:10 GSPL:GGL; GTL 3:1.

Strategic Priorities & Outlook

• Integrated end-to-end natural gas value chain; renewables expansion.
• Digital initiatives to enhance customer experience and digital collections.
• PNG Drive expansion: ~91k D-PNG and ~1k C-PNG connections added (Mar–Jul 2026).
• Wind portfolio PPAs provide long-term revenue visibility.
• Capital allocation to grow adjacent natural gas value chain.

Risks & Mitigation

• Geopolitical crisis risk to gas supply; mitigated by operational resilience, Morbi supply ensured.

Governance & Leadership

• Chairman: Manoj Kumar Das, IAS; MD: Avantika Singh Aulakh.
• Independent Directors: Rekha Jain, T. Natarajan, Yogesh Singh, Balwant Singh (Retd.), Bhadresh Mehta.
• Scheme updates: completed; new name; GTL listing underway.