India's Gujarat Gas Q1 profit tumbles as lower prices drag

Gujarat Energy

02/08/2023 12:31

BENGALURU, August 2 - Indian city gas distributor Gujarat Gas  GGAS.NS  posted a 44% slump in first-quarter profit
on Wednesday, as lower selling prices weighed.
    Standalone net profit after tax for the Gandhinagar-based company fell to 2.15 billion rupees ($26.04 million) during
April-June from 3.81 billion rupees, a year ago. 
    Revenue from operations dropped 26% to 39.24 billion rupees, the company's third sequential fall. 

    For further earnings highlights, click  urn:newsml:reuters.com:*:nFWN39J1BO
    
KEY CONTEXT 

Natural gas prices fell in the quarter, an inherent positive for gas distributors, but Gujarat Gas' bet on retaining
volumes through price cuts may hurt its margins, analysts had flagged. 
    While peer Mahanagar Gas  MGAS.NS  is yet to report results, Indraprastha Gas  IGAS.NS  last month posted a profit rise
but missed estimates on volume weakness.
    Gujarat Gas, which mainly supplies piped natural gas to manufacturing hubs, reported sequential drop in industrial
volumes throughout the calendar year 2022 as clients shifted to cleaner fuel alternative, propane. 


    
PEER COMPARISON 
    
                                   Valuation (next   Estimates (next 12           Analysts' sentiment         
                                     12 months)           months)                                             
                       RIC         PE      EV/EBIT  Revenue      Profit    Mean      # of      Stock to       Div yield (%)
                                           DA       growth       growth    rating*   analysts  price          
                                                                                               target**       
 Gujarat Gas Ltd        GGAS.NS     20.78    13.06     4.88        1.42    Hold            18      0.91                0.41
 Indraprastha Gas Ltd   IGAS.NS     17.80    11.55     -8.02      10.93    Buy             18      0.87                2.81
 Mahanagar Gas Ltd      MGAS.NS     12.23     7.31     -8.20       8.20    Buy             20      0.97                2.28
 
    
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell

** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the
PT
    
APRIL-JUNE STOCK PERFORMANCE 
    

    
-- All data from Refinitiv

-- $1 = 82.5550 Indian rupees

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APRIL-JUNE STOCK PERFORMANCE    https://tmsnrt.rs/45e1oEn
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 (Reporting by Hritam Mukherjee in Bengaluru; editing by Eileen Soreng)
 ((Hritam.Mukherjee@thomsonreuters.com; Twitter: @MukherjeeHritam;))