Gujarat Gas Limited (GUJGASLTD) | News Based Sentiment Analysis

• On September 5, 2025, Gujarat Gas reported nearly flat revenue in Q4 FY25 at ₹4,288.98 Crore, compared to ₹4,294 Crore the previous year, but Profit After Tax declined to ₹287.88 Crore from ₹410 Crore in Q4 FY2024. This suggests challenges in converting revenue into profit, despite a 12% increase in CNG sales, and was partially attributed to reduced allocation of cheaper domestic gas.
• Despite the quarterly PAT decline, Gujarat Gas demonstrated underlying operational strength with annual EBITDA increasing to ₹2,090 Crore for FY25, up from ₹1,984 Crore a year prior. This indicates the company is managing costs effectively, even with short-term profitability pressures.
• Looking ahead, Gujarat Gas is planning significant expansion with a capital expenditure increase to around ₹1,000 Crore in FY26, up from ₹742 Crore in FY25. Management is guiding for an EBITDA margin of 4.5% to 5.5% and projects 12% CNG volume growth, signaling a focus on future profitability.
• The Board approved undertaking the sourcing and sale of Propane/LPG to industrial customers on August 5, 2025, aiming to address volume pressure experienced in Q4 FY25 where some Morbi customers shifted to propane. This proactive move demonstrates adaptability to changing market dynamics.
• Gujarat Gas reported record CNG volumes of 3.33 mmscmd in Q1 FY26, compared to 3.22 mmscmd in Q4 FY25, alongside an approximately 11% increase in EBITDA to Rs. 579 Crore and a 14% increase in PAT to Rs. 327 Crore. This positive momentum suggests a strong start to FY26.
• The stock showed signs of a trend reversal on September 1, 2025, gaining 5.52% and reaching an intraday high of Rs 438, outperforming its sector. However, year-to-date performance remains down 11.76%, indicating ongoing investor caution.
• The GSPC-Gujarat Gas merger is progressing towards completion, with regulatory approvals underway and anticipated completion by September-October 2025. Management believes this merger will improve business synergies and gas sourcing efficiency.
• Gujarat Gas announced an annual dividend of INR 5.82 per share, with the ex-date being September 4, 2025, and payment scheduled for October 24, 2025, representing a 1.4% trailing dividend yield based on a stock price of ₹419.45 as of August 31, 2025.

The Investment Story: Gujarat Gas is navigating a period of mixed results, with short-term profit pressures offset by long-term growth initiatives and a potential value-creating merger. Recent Q1 FY26 results show a positive trend, indicating a potential turnaround.

What It Means for Investors: Investors should weigh the current profitability concerns against the company's expansion plans, strategic moves like propane/LPG sales, and the anticipated benefits of the GSPC Group restructuring. The dividend provides some downside protection, but the stock's year-to-date performance suggests continued uncertainty.

Looking Ahead: Investors should monitor the completion of the merger with the Ministry of Corporate Affairs, the execution of the FY26 capex plan, and the company's ability to achieve its EBITDA margin guidance. The Annual General Meeting on September 25, 2025, may provide further insights.

The Bottom Line: Gujarat Gas presents a complex investment case. While current profitability is a concern, the company's strategic initiatives and potential for long-term growth, coupled with a reasonable dividend yield, warrant continued monitoring, but require careful consideration of the risks and uncertainties.