Whalesbook
Financial Performance and Analyst Upgrade
Gujarat Gas Limited reported its third-quarter fiscal year 2026 financial results, revealing a consolidated net profit after tax (PAT) of ₹266.84 crore, an increase of 20.75% compared to ₹220.99 crore in the same period last year. On a standalone basis, the PAT rose by 19.84% year-on-year to ₹265.58 crore. However, the company's revenue from operations saw a year-on-year decline of 10.79%, reaching ₹3,865.11 crore for the quarter ended December 31, 2025.
Despite the revenue contraction, operational efficiencies led to an improved EBITDA per standard cubic meter (scm) of ₹5.8, up from ₹4.4 in Q3 FY25 and ₹5.6 in Q2 FY26. Overall EBITDA for the quarter stood at ₹4.5 billion, remaining flat sequentially but showing a 17.6% increase year-on-year. Adjusted profit after tax also grew by 19.8% year-on-year to ₹2.7 billion.
Reflecting on these results and factoring in the recent stock price correction, Prabhudas Lilladher has upgraded its rating on Gujarat Gas to 'Accumulate' from 'HOLD'. The brokerage set a new price target of ₹422, based on a 23x multiple of its December 2027 estimated earnings per share. For the first nine months of FY26, the company reported a flat year-on-year EBITDA of ₹14.1 billion and an 1.8% year-on-year growth in adjusted PAT to ₹8.7 billion, with volumes declining 11.2% year-on-year.
Strategic Initiatives and Volume Recovery
To address competition from propane, particularly in the industrial ceramic sector of Morbi, Gujarat Gas's management implemented a strategic price cut of ₹4.5 per scm for Piped Natural Gas (PNG), effective January 1, 2026. This has narrowed the price differential with propane to ₹2.4 per scm. Early indicators suggest this measure is yielding positive results, with Morbi volumes showing improvement, increasing to 2.1-2.2 mmscmd currently and projected to reach 2.3-2.7 mmscmd by the end of January 2026 and 3.0-3.5 mmscmd by February-March 2026.
However, the company faced challenges including a 10% sequential decrease in industrial sales volume due to lower Morbi volumes and a significant shortfall in gas allocation for the CNG segment (64%). The sector at large is experiencing headwinds, with city gas distributors finding it harder to secure new industrial customers as natural gas remains costlier than competing liquid fuels like LPG and propane. Gujarat Gas is also implementing a digitization drive and has appointed McKinsey & Company as a strategic consultant. Shareholders have also approved a composite scheme of amalgamation and arrangement.
Market Performance
As of Thursday, January 22, 2026, Gujarat Gas shares were trading approximately 1.6% higher at ₹405.70 on the NSE. The company's market capitalization hovers around ₹27,000-₹28,000 crore. The stock is currently trading with a trailing twelve-month Price-to-Earnings (P/E) ratio of approximately 23.94. The 52-week trading range for the stock has been between ₹360.25 and ₹508.70.