Gujarat Gas Ltd. has cut its guidance for volume growth in the current financial year as the management expects the industrial piped-natural-gas volumes in the Morbi region to reduce in the second quarter.
The natural gas distribution company now expects a 6–7% pickup in volume as compared to the 10% guidance given earlier, the management said in a post-results analysts' conference call on Thursday.
GGL anticipated that the industrial PNG volumes from the Morbi cluster could fall 30–40% on a sequential basis in the September quarter. The Morbi region, also known as the ceramic capital of India, is a key geographical area for the city gas distribution company and the industrial PNG segment accounted for around 66% of its total volumes in the June quarter.
GGL's consolidated net profit fell sequentially in the first quarter of the fiscal, missing analysts' estimates.
GGL Q1 FY25 Earnings Highlights (Consolidated, QoQ)
Revenue up 7.5% to Rs 4,450.3 crore versus Rs 4,134.2 crore (Estimate: Rs 4,091 crore).
Ebitda down 9% to Rs 535.6 crore versus Rs 591.1 crore (Estimate: Rs 625 crore).
Ebitda margin at 12% versus 14.3% (Estimate: 15.3%).
Net profit down 19% to Rs 330.7 crore versus Rs 410.5 (Estimate: Rs 365 crore).
The company said that Morbi will see lower volumes due to a combination of factors, including ceramic plant shutdowns during Janmashtami, reduced exports caused by geopolitical issues in West Asia, demand disruptions from the monsoon, and increased competition from alternative fuels like propane following a price hike in industrial PNG.
GGL's volumes grew 19% annually and 13% sequentially to 11 million standard cubic metres per day in the June quarter.
The volume growth in the first quarter was mainly on the account of recovery in the industrial PNG segment. One of the main reasons why the segment saw recovery in the quarter was because GGL's natural gas was priced at Re 1-per-standard-cubic-metre premium as compared to propane prices in the Morbi cluster. However, this has now changed to Rs 4 per standard cubic metre.
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