Gujarat Gas (GUJGA IN) – Q3FY26 Result Update – In-line EBITDA/scm; Morbi vol grows post Q3 – Upgrade to ‘Accumulate’
Published on 21 Jan 2026
We upgrade our rating to ‘Accumulate’ from ‘HOLD’ factoring in the recent stock price correction. GUJGA’s total volume in Q3FY26 was broadly in line with our estimates at 8.4mmscmd (-3.2% QoQ and -11.5% YoY, PLe: 8.5mmscmd), due to lower Morbi volumes. Lower gas costs and other expenses led to EBITDA/scm of Rs5.8/scm (PLe: Rs5.6/scm) vs. Rs5.6/scm in Q2FY26 and Rs4.4/scm in Q3FY25. EBITDA stood at Rs4.5bn, flat QoQ and up 17.6% YoY (PLe: Rs4.4bn; BBGe: Rs4.4bn), while adjusted PAT came in at Rs2.7bn, down 5.5% QoQ but up 19.8% YoY (PLe: Rs2.5bn; BBGe: Rs2.8bn). To counter competition from propane, the management has cut PNG price for Morbi ceramic industry by Rs4.5/scm with effect from 1st Jan’26. Price differential with propane currently stands at Rs2.4/scm. Morbi volumes have improved to 2.1-2.2mmscmd currently and are expected to reach 2.3-2.7mmscmd by the end of Jan’26 and 3.0–3.5mmscmd by Feb-Mar’26. For 9MFY26, EBITDA remained flat YoY at Rs14.1bn, while adjusted PAT grew 1.8% YoY to Rs8.7bn. Volumes declined 11.2% YoY to 8.6mmscmd, though EBITDA/scm improved to Rs6.0/scm vs. Rs5.3/scm YoY in 9MFY25. We build in volume of 9.1/9.6mmscmd in FY27/FY28E, driven by an expected recovery across all segments. The management has raised its FY26 EBITDA/scm guidance range to Rs5.5–6.5 (Rs5.5/scm earlier, including other income). We factor in EBITDA/scm of Rs5.9/6.0/scm in FY27/28E. Upgrade to ’Accumulate’, with TP of Rs422 (earlier Rs420), based on 23x (earlier 24x) Dec’27E EPS.
