Gujarat Gas Limited — Investor Meet, 13-11-2024: Analysts/Institutional Investor Meet/Con. Call Updates

### Financial Performance

Gujarat Gas Limited reported revenue from operations of INR 3,949 crore for the quarter, a slight decline from INR 3,991 crore in the same quarter last year. The profit before tax rose to INR 415 crore, up about 3% year-over-year, while EBITDA improved to INR 553 crore, reflecting a 5% gain from the previous year. The EBITDA per SCMD stood at INR 6.86, compared to INR 6.14 a year prior. Notably, CNG sales volumes increased by 12% year-on-year, reaching 2.93 mmscmd.

### Future Outlook and Growth Drivers

Management is optimistic about future growth driven by expanding geographical coverage and network infrastructure. Plans to enhance CNG infrastructure and increased blending of hydrogen into the gas supply system indicate a proactive approach toward cleaner energy solutions. Additionally, the company anticipates a rebound in sales volumes during the upcoming quarter due to seasonal demand fluctuations.

### Order Book and Operational Updates

The domestic customer base continues to grow, with the company connecting approximately 38,500 new domestic customers recently, totaling over 2.19 million. CNG sales outside Gujarat are particularly strong, having surged by 25% year-over-year. However, industrial sales volumes, especially in Morbi, reflected a temporary decline, severely impacted by geopolitical conditions.

### Analyst Q&A Insights

- **Revenue and Profitability**: Analysts inquired about the possibility of passing through increased gas procurement costs, leading to discussions on potential price adjustments to offset rising LNG costs.

- **Market Position and Competitive Landscape**: Management clarified that 87% of CNG revenue is from Gujarat, noting that sustained consumer adoption and strategic expansions could enhance market share.

- **Operational Challenges or Risks**: Queries regarding the impact of recent price hikes on volume sales highlighted a cautious but confident management stance, indicating a strong belief in CNG's competitive advantage over petrol and diesel.

- **Capex and Capital Allocation**: The company plans to maintain its capex roadmap of approximately INR 800 crore to INR 1,000 crore to support network expansion.

- **Strategic Priorities and Long-Term Vision**: Management emphasized maintaining a balance between volume growth and margin enhancement, focusing on close customer relations and infrastructure advancements to capture market opportunities.

### Market or Regulatory Updates

No significant regulatory hurdles were discussed, but management reiterated ongoing engagement with PNGRB regarding open access regulations.

### Strategic Focus Areas

The company remains focused on growth through digital initiatives, CNG infrastructure enhancements, and a commitment to ESG practices, including hydrogen blending projects, which underscore a strategic push towards sustainability.

### Investor Insight

Given the observed financial health, potential for volume recovery, and strategic initiatives aligning with market trends, the outlook appears robust, suggesting a 'buy' position for retail investors based on the growth trajectory and management's proactive strategies in navigating market challenges.