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Gujarat Gas Delivers Q3 FY26 Profit Growth Amid Revenue and Volume Challenges
Gujarat Gas Limited reported its third quarter fiscal year 2026 financial results, showcasing a year-on-year profit after tax (PAT) increase of 20.75% to ₹266.84 crore, compared to ₹220.99 crore in the corresponding period of the previous fiscal year. On a standalone basis, PAT rose by 19.84% to ₹265.58 crore. However, the company's revenue from operations saw a year-on-year decline of 10.79% to ₹3,865.11 crore.
Sequentially, PAT experienced a decrease of 5.3% from ₹281.01 crore in Q2 FY26, and revenue fell by 2.9% from the prior quarter. Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 14% year-on-year to ₹502 crore, but declined by 3.5% sequentially. Total gas volumes contracted to 8.37 million metric standard cubic meters per day (mmscmd) in Q3 FY26, down from 9.47 mmscmd in Q3 FY25, largely attributed to a slowdown in industrial demand from the Morbi region. This industrial volume weakness saw a 19.7% sequential fall to 3.93 mmscmd.
CNG Segment Strength and Morbi Demand Dynamics
Despite the overall industrial challenges, Gujarat Gas recorded its highest-ever CNG volume at 3.45 mmscmd in Q3 FY26, an 11% increase year-on-year. Domestic and Commercial Piped Natural Gas (PNG) volumes also showed growth. The company has been actively expanding its CNG network and exploring new models to accelerate growth.
The weakness in Morbi's industrial segment, a key market for the company, persists due to competition from alternative fuels like propane, which have become more competitive due to fluctuating LNG prices. Gujarat Gas has responded by reducing PNG prices for the Morbi ceramic industry by ₹4.5/scm effective January 1, 2026, to improve price competitiveness. This has reportedly led to an improvement in Morbi volumes in January 2026.
Brokerage Outlook and GSPC Merger as Key Catalysts
Analysts largely maintain a positive long-term view on Gujarat Gas. Elara Capital upgraded its rating to 'Accumulate' with a target price of ₹449, anticipating a recovery in Morbi volumes and moderation in LNG prices. JM Financial reiterated its 'Buy' rating with a target price of ₹535, citing improved competitiveness, CNG expansion, and potential value accretion from the GSPC group restructuring. Motilal Oswal Financial Services also maintained a 'Buy' rating and a target price of ₹485, highlighting long-term industrial volume growth and the proposed merger as key growth drivers.
The proposed amalgamation of Gujarat Gas with GSPC, Gujarat State Petronet Ltd (GSPL), and GSPC Energy Ltd is a significant event. Expected to be completed by February 2026, JM Financial estimates a potential value accretion of approximately ₹4,000 crore from tax benefits and valuation improvements. The merger has received shareholder approvals.
Market Performance and Valuation
Following the results announcement, shares of Gujarat Gas traded higher. As of 10:57 AM on Thursday, January 22, 2026, the stock was trading 1.6% higher at ₹405.70 on the NSE [cite: Source A]. The company's market capitalization stands around ₹27,000-₹28,000 crore. Gujarat Gas currently trades at a trailing twelve-month P/E ratio of approximately 23.94, which is higher than the broader gas sector average of around 20.62 but lower than some of its direct peers like Adani Total Gas.
The company's stock has shown volatility, with a beta of 1.20 indicating higher than market volatility. Despite the near-term revenue pressures, the company's strong CNG segment performance and strategic initiatives are key factors influencing analyst sentiment.