Stronger Propane Prices Drive Another Morbi Price Hike By Gujarat Gas: ICICI Securities

ICICI Securities Report

Gujarat Gas Ltd. has hiked industrial gas prices at Morbi by Rs 2.5/standard cubic metre, the second hike in Q2, post a Rs 2/scm hike taken in Aug-23.

The decision has been driven by an improvement in propane prices in last two-three months. Prices have steadily improved since then, with Aug-23 prices at $470/tonne and Sep-23 prices declared at $550/tonne – coupled with an increase in import duties to ~18% from less than 6% earlier.

Gujarat Gas industrial prices are now at a discount to propane for the first time in six months. While this pricing strength is welcome and helps protect volumes in the critical Morbi region (43% of total Gujarat Gas volumes), vulnerability of volumes to alternate fuel prices remains high, while slower than expected development from new areas is a return-dilutive concern.

We raise our FY24E/FY25E earnings per share by 4.1%/1.1%, but reduce the target price by 2%. Reiterate 'Hold'.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.