Gujarat Gas - Softness In LNG Prices Obscures Murky Long-Term Prospects: ICICI Securities

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..ICICI Securities Report.We downgrade Gujarat Gas Ltd. to Reduce, from 'Hold', as we turn increasingly worried about the company’s growth trajectory beyond FY25. The recent weakness in liquefied natural gas prices is a positive (assuming it is not passed through) and drives a material 6/19.1/15.3% upgrade in FY24E/25E/26E earning per share, but does not detract from structural worries..Essentially: Growth from areas ex-Morbi remains murky, with limited traction observed from the ~Rs 43 billion capex over FY19-23 and a further Rs 36 billion estimated over FY24-26E. (volume/Ebitda compound annual growth rate over the same period at 8/14%); Margins remain volatile and dependent on propane price vagaries; Gujarat Gas guidance on margins is cautious, topped with limited visibility on volume growth; and The company’s valuation is still at >20 times FY26E EPS, leaving room for more downside risks..Key upside risks: Sharper recovery in liquified petroleum gas (propane) prices, Faster execution of expansion plans in new areas, Sharp drop in LNG prices. Key downside risks: Longer sustained weakness in propane prices, Slower ramp up of volumes from new areas, Sudden spike in spot LNG prices..Click on the attachment to read the full report: .Stock Market Live: Sensex, Nifty Off Day's Low As Auto Stocks Gain; Nifty PSU Bank Falls Nearly 1%.DISCLAIMERThis report is authored by an external party. NDTV Profit 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 NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Gujarat Gas - Softness In LNG Prices Obscures Murky Long-Term Prospects: ICICI Securities

The recent moderation in liquefied natural gas costs, owing to comfortable inventory levels in Europe, and the coeval decline in crude prices are margin propellants for Gujarat Gas Ltd.

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Gujarat Gas - Softness In LNG Prices Obscures Murky Long-Term Prospects: ICICI Securities

The recent moderation in liquefied natural gas costs, owing to comfortable inventory levels in Europe, and the coeval decline in crude prices are margin propellants for Gujarat Gas Ltd.

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