Street View: Morbi sales volume to grow for Gujarat Gas

Gujarat Energy

11/05/2023 07:38

** Shares of Gujarat Gas Ltd  GGAS.NS  rise as much as 6% to
490.60 rupees, highest in six weeks
    ** The city gas distributer posted a bigger-than-expected
drop in quarterly profit on Wednesday, dragged by sales weakness
in key industrial segment. Analysts expect the company to
continue to report growth in sales volume of Morbi gas, while
they see low gas price weighing on margins
        
    
    VOLUME GROWTH TO COME AT THE EXPENSE OF MARGINS
    ** Nirmal Bang ("buy", PT, PT raised to 629 rupees from 614
rupees) raises earnings estimates for FY2024 and FY2025 by 16.7%
and 18.5%, respectively, citing potential growth uptick due to
revival in Morbi volume growth
    ** Emkay Global ("hold", target price raised to 530 rupees
from 520 rupees) says Q4 results were a positive surprise, aided
by drop in unit gas costs, volume growth
    ** Ambit Capital ("sell", PT unchanged at 490 rupees)
expects volume CAGR of 9% of FY2022-2026, sees earnings growth
coming at the cost of margins
    ** Jefferies ("Underperform", PT cut to 420 rupees from 425
rupees) raises volume estimate for FY2024 and FY2025, but sees
limited earnings upside despite higher volumes due to price cuts
in Morbi gas
    
    
    

 (Reporting by Bharath Rajeswaran in Bengaluru)
 ((bharath.rajeswaran@thomsonreuters.com; +91 9769003463))