Why Gujarat Gas Shares Outperform Their Peers This Month


Gujarat Gas Ltd shares have far outpaced its peers in recent weeks. It is expected to be the largest beneficiary among town gas distribution companies if gas sales are subject to the Goods and Services Tax (GST) regime. This is due to its strong exposure to institutional sales. Industrial customers will be able to benefit from input tax credits, thereby reducing the cost of their gas feedstock. Gujarat Gas could also benefit from a tax credit on its operating expenses and investments.

During the December quarter, Gujarat Gas reported a rebound in volumes, with gas consumption picking up after the easing of covid lockout standards. The company’s net profits in the last quarter almost doubled from the levels of the previous year at 392 crore. “(Profit) has exceeded our estimates and Street, with higher than expected sales volume and lower gas cost,” analysts at Antique Stock Broking said.

The company’s gas sales volumes were 11.4 mmscmd (million standard metric cubic meters per day), up 23% year-on-year. Industrial volumes represent 80% of its total volumes. The growing demand from the Morbi industrial hub continues to generate volumes, with customers seeking cleaner and cheaper fuels.

The company added 83 CNG stations in this fiscal year, bringing the total to 484, according to analyst data. It plans to add 150 CNG stations each year, three times the previous target, and that can generate volumes, analysts said.

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