Tag: Gujarat Gas

Indian Oil Corporation shares gain on signing MoU with Gujarat Gas to expand services

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Indian Oil Corporation shares gained on Tuesday, April 16, after Gujarat Gas said it is signing an agreement with the former to expand its range of services and products for consumers.

Under the terms of the non-binding Memorandum of Understanding (MOU), both companies are poised to offer a comprehensive suite of products and services within Gujarat Gas Ltd’s authorised areas, GGL said in a filing to the stock exchanges on Monday.\

Indian Oil Corporation opened at ₹166.4 apiece in Tuesday’s trade session and was trading 2.28% higher at 10.55 am at ₹170.3 apiece on the BSE.  Meanwhile, stock of Gujarat Gas Ltd (GGL) opened at ₹583 on the BSE on Tuesday, up 1.74% from its previous close of ₹573.15 apiece. However, Gujarat Gas gave up its opening gains and was trading 1.47% lower at ₹564.75 apuiece at 10.55 am.

As per the agreement, Indian Oil Corporation Ltd (IOCL) will extend its offerings by providing liquid fuels through Gujarat Gas outlets.

IOCL will also make its extensive range of automotive lubricants, greases, and specialties available at the GGL outlets, catering to the diverse needs of customers.

As part of the alliance, IOCL will establish CNG facilities at its company owned, company operated (COCO) outlets, boosting the accessibility of this eco-friendly fuel option.

In a reciprocal move, GGL will set up CNG Mother Facilities at IOCL outlets, further enhancing the availability and distribution of compressed natural gas. This partnership between GGL and IOCL signifies a significant step forward in the quest for sustainable and accessible energy solutions in the country, it said.

By leveraging their resources, both players are set to cater to the needs of consumers while contributing to the nation’s energy security and environmental goals.

Also Read: Marksans Pharma has rallied over 100% in 12 months and a major investor just bought stake

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IGL, MGL, Gujarat Gas in focus: Gas regulator says ‘will not intervene in pricing’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The city gas distribution space is abuzz, and not for the best reasons. The three companies, IGL, MGL and Gujarat Gas have cut prices. IGL and MGL for the CNG segment and Gujarat Gas for the industrial segment and all of them cited lower natural gas prices as the reason for this price cut.

But price cuts are the usual course of business, why did the stocks fall so much? This is because, at the same time, the oil minister in a press conference said that gas sector reforms have not reached the end consumers at a time when the government is focusing on affordable gas prices, and added that they are worried about high profits earned by these companies and the government is ready to take steps with respect to pricing and ensure compliance by the companies.

That is not it, the PNGRB also uploaded a document on Wednesday (March 6) that indicated that MGL’s exclusivity in the Mumbai region ended in 2021, which means they will not have exclusive rights to this region when it comes to CNG sales.

Before we look at the impact, let’s try and understand what kind of margins these companies are making.

In Q3, MGL made the highest EBITDA in the space at ₹13.3, followed by IGL at ₹7.2 and then Gujarat Gas at ₹4.8. Of course, MGL and IGL have the highest exposure to CNG space and these have a direct impact on retail consumers. In terms of profits, IGL profit margin for the last four years is 15-16% and for MGL it is at 19-20% in the last two years.

So, what got the Street worried? One, they are worried about the government’s intervention with respect to pricing in the CGD sector, which has been market-driven so far and second, the exclusivity issues for some of these companies which could end soon leading to more competition and fewer volumes. The fear is there would be a hit on both margin and volumes.

We spoke to the PNGRB, the regulator, and they indicated that they received no communication from the ministry regarding curbing CGD pricing and that there is no intention to intervene in regulating or getting into day-to-day activities, and that they are in favour of market freedom.

The normal profit level is 20% in CGD infrastructure and they are not saying CGDs are making super-normal profits. Ideally, a 12-15% profit margin is what seems reasonable and right now companies are making over 20% which they are worried about.

What next? First, the end of exclusivity for CGD companies is still subjudice and a final decision is awaited on this. This can extend by 10-plus years given precedents and could happen for MGL as well. Second, regulating profits for CGDs would mean lower capex in the sector and this would conflict with the government’s goal of expanding the gas economy and infrastructure.

What are brokerages making of this?

Emkay, for instance, says such ministerial statements closer to elections are expected given that petrol and diesel price cuts are also long-awaited. However, pricing freedom should endure and stay linked to market forces and nothing has structurally changed.

Nuvama says that more than half the price cut by MGL is led by easing spot prices and hence CNG is still 50/35% more competitive than petrol/diesel and hence volume boost is likely. The PNGRB stated that MGL’s Mumbai monopoly ended in April 2021 but nothing can move forward till pending court cases are resolved.

ICICI Sec says that, technically, the PNGRB Act does not allow for regulation of end-consumer prices and the signal they are getting from pronouncements may indicate a further lowering of priority gas allocation to the CGDs and this could create margin pressure for CGDs but they are puzzled by the need articulated by the regulator to increase penetration and talk about lower profits at the same time.

And this is what the Street is worried about, regulatory pressure on these companies the way we have seen for OMCs as well. 

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gujarat Gas surges as the Street sees reduction in industrial gas prices by 8% as positive

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Gujarat Gas was in focus on Thursday as the city gas distribution firm slashed industrial gas prices by approximately ₹3.5 per standard cubic meter (scm). The reduction is significant and translates into an 8% cut in prices, fuelling interest among investors and industry observers.

The decision came in the wake of an anticipated price cut aimed at bolstering the company’s industrial gas volumes. The third quarter of the fiscal year 2023-2024 (Q3FY24) witnessed a decline in volumes, particularly in the industrial segment, prompting speculation about potential price adjustments.

Morbi, recognised as a vital industrial cluster for the ceramic segment, reported subdued gas volumes ranging between 4 and 4.2 million metric standard cubic meters per day (mmscmd) in January and February.

ICICI Securities had previously hinted at the likelihood of propane prices, a competitor for Gujarat Gas, hovering in the range of ₹41-43 per scm in subsequent periods. Recognising the competitive landscape, the company took the proactive step of reducing industrial gas prices to safeguard its market share and attract higher volumes.

Broking firm UBS has not only elevated the Gujarat Gas stock rating from ‘sell’ to ‘neutral’ but has also raised the target price from ₹380 to ₹610 per share. According to the brokerage’s report, this rating adjustment is attributed to a more optimistic perspective on volumes and margins, driven by the softening of spot LNG prices.

While the market responded positively to the news, with Gujarat Gas stock rising by 3% on Thursday, closing the trading session at ₹565.70, uncertainties linger about the immediate impact of the price cut on volumes.

The success of this strategic move hinges on the resolution of challenges faced by the Morbi ceramic cluster, including sluggish demand in both the domestic and export markets. Issues such as Red Sea disruptions and elevated freight costs have contributed to a subdued market environment, necessitating a cautious wait-and-watch approach to gauge the effectiveness of the price reduction.

The Ahmedabad headquartered company, which boasts a market capitalisation of ₹38,918.14 crore, has delivered returns of approximately 23% over the last six months.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gujarat Gas gains as UBS sees 11% upside on improved outlook

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Analysts at brokerage UBS expect up to 11% upside in Gujarat Gas shares in the next 12 months following improved outlook on volumes and margin due to recent correction in LPG prices.

The brokerage also upgraded the stock to ‘neutral’ from its ‘sell’ recommendation earlier and increased the target price from ₹380 per share to ₹610 per share. The new target price suggests a potential upside of 11% from Wednesday’s close.

The brokerage in a report stated that the rating upgrade follows and improved outlook on volumes and margin as spot LNG prices have softened.

UBS raised the FY25-26E volume estimate by 9% (industrial volumes by 16%) and gross margin by 4-8%, which leads to a 19-24% higher earnings before interest tax depreciation and amortisation (EBITDA).

The brokerage mentioned that a further decline in spot LNG prices to 2019-20 levels (USD 5.0/mmbtu) poses upside risks to earnings.

The brokerage stated that the improved near-term outlook has already been reflected and risk-reward looks balanced, after a close to 20% rally in 2024 (year-to-date),

Gujarat Gas shares gained as much as 1.85% in morning trade on Thursday, February 29, to hit a high of ₹558.85 per share on BSE. The stock was trading 0.28% higher at ₹550.2 at 9.47 AM.

Gujarat Gas Ltd is the largest city gas distributor in India. Gujarat Gas is currently operating in 27 geographical areas across six states and a union territory with a good mix of matured and emerging CGD areas.

The company reported the highest ever CNG volume of 2.78 MMSCMD in the December quarter, which is 14% higher than that in the third quarter of the previous financial year.

The company reported a profit after tax of ₹220 crore for the December quarter against ₹298 crore in the September quarter of this year.

Also Read: Tata Motors shares fall after CLSA downgrades stock to ‘Outperform’ — should you buy or sell?

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Crude prices dip: What should you do with oil and gas stocks?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Probal Sen, Energy Analyst at ICICI Securities, shared his outlook for oil, and on stocks in the oil and gas space.

According to Sen, Gujarat Gas is likely to maintain its strength over the next few months. The stock’s performance hinges on the propane versus gas dynamic, with recent propane price upticks to $610-620 a tonne. This, coupled with softening LNG prices to $15-15.50, bodes well for Gujarat Gas in terms of price competitiveness. However, Sen advised investors to sell into the rally, citing murkiness in long-term prospects from a volume perspective.

Petronet LNG, he noted, operates as a price taker in the volatile oil and gas market. While remaining positive on the overall sector, he noted that softer prices act as a benefit for most companies in the space.

Sen continues to be positive on oil marketing companies (OMCs) such as Hindustan Petroleum Corporation (HPCL). He highlighted the government’s clear message of no urgency for significant fuel price hikes. This stance, along with decent refining margins and strong marketing, positions HPCL favorably from a two to three-year perspective.

Sen projected a robust 14% year-on-year (YoY) improvement in the earnings before interest, tax, depreciaton, and amortisation (EBITDA) and an 8% YoY improvement in profit after tax for Reliance Industries (RIL).

On Monday morning, Brent crude was marginally down at $78.67 a barrel, while US West Texas Intermediate crude futures shed 0.1% to $73.71 a barrel.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Antique Broking: CNG adoption slows in December, gas distribution companies face EV challenges

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The uptake of compressed natural gas (CNG) was notably sluggish in December, reigniting worries about how the transition to electric vehicles (EVs) might affect city gas distribution (CGD) companies.

According to a report by Antique Stock Broking, December 2023 saw a decrease in CNG adoption across all three major CGD companies. This downturn primarily involves vehicle conversions from traditional fuels like petrol or diesel to CNG.

Mahanagar Gas was impacted because quarter two was a record-high quarter for the company in terms of volumes and conversions. Gujarat Gas and Indraprastha Gas Ltd (IGL) continue to suffer in terms of volume growth and that is something that has been a cause of concern in quarter two for these companies as well.

The hit was seen across segments such as passenger vehicles (PV), commercial vehicles (CV), or three-wheelers. Private vehicles, which were seeing strong adoption of CNG, have also now cooled off as people are now exploring options in EVs versus CNG vehicles.

While the CGD companies are hoping the trend will reverse, there is a strong push coming in from OEMs. Even the CNG bus has been lagging and IGL and Gujarat Gas continue to lose their market share to EVs.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gujarat Gas gains momentum in trade as propane prices experience an uptick

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Propane prices have experienced a slight increase, marking a marginal hike from $610 per tonne to $620 per tonne. This marginal hike is a positive development for Gujarat Gas. The shares of Gujarat Gas settled 4.83% up at ₹483.80 a piece in the session on Monday. It has gained over 9 percent in the last month.

Over the past six months, propane prices have witnessed a significant upswing, reaching a low point of approximately $440 per tonne in July and displaying a consistent upward trajectory since then.

The positive impact on Gujarat Gas stems from the fact that propane serves as a competitor to the company’s products. With the rise in propane prices, the demand for Gujarat Gas is expected to increase, thereby benefiting the company.

A more significant factor contributing to Gujarat Gas’s favourable position is the notable decrease in spot LNG prices. The decline in crude prices and the global trend in gas prices, have led to a substantial drop in spot LNG prices. In November, spot LNG prices were at $17 per British thermal units (MMBtu), but they have now cooled off to around $11 per MMBtu.

This shift is particularly beneficial for Gujarat Gas because a significant portion of its sourcing relies on spot LNG, as opposed to entities like Mahanagar Gas (MGL) or Indraprastha Gas (IGL), which primarily rely on domestic gas sources.

The reduced spot LNG prices further contribute to the positive outlook for Gujarat Gas. Consequently, the stock has experienced a significant uptick in response to these favourable market dynamics.

Also Read:India cuts natural gas price to $7.82 per mmBtu for January

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gujarat Gas hikes industrial gas price by ₹2.3/scm from November 1

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

State-run Gujarat Gas Ltd on Saturday, October 28, announced a ₹2.3 per standard cubic metre (scm) increase in industrial gas price to ₹45.6/scm. The same will be in effect from November 1, 2023.

The equivalent propane price is ₹42.2/scm. The hike is in line to the recent rise in spot LNG price.

Propane is now marginal discount to gas as the government removed the additional import duty on it from September 1, 2023, which was levied in July this year.

On September 1, it had hiked gas prices for customers in Morbi, Gujarat for the second time in a fortnight, to ₹2.5/scm to ₹43.3/scm.

In August, Gujarat Gas had announced a ₹2.5 price hike in industrial gas to ₹40.83/scm.

On another note, in the first qurter this fiscal, the company reported a 43.4% decline in net profit at ₹215.1 crore from ₹382 crore in the year-ago period.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Q2 Results Preview: The sectors and companies that may report the best and worst profit growth

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Energy, consumer discretionary and materials are the three sectors that are likely to contribute the most to the profitability of Nifty 200 companies for the September quarter, according to Bloomberg consensus estimates.

Net profit of the top 200 companies of the country is likely to hit Rs 2.4 lakh crore, which is an increase of 44.5 percent from the same period last year.

On the topline front, these three sectors are likely to contribute to more than half of the combined revenue of the index, which is pegged at Rs 22.3 lakh crore for the quarter.

The sample comprises of 176 companies of the Nifty 200 index, for which earnings estimates for the quarter are available.

While analysts expect Oil Marketing Companies (OMCs) – HPCL, BPCL and Indian Oil to return to profit in the September quarter, Reliance Industries is likely to report a net profit growth of over 50 percent during the September quarter compared to last year.

Other blue chip companies, which are likely to post double-digit growth in their net profit include Larsen & Toubro, Bharti Airtel, HDFC Bank, Maruti Suzuki, among others. In terms of sectors, the net profit of the energy segment is likely to double year-on-year, while that of consumer discretionary and materials is likely to surge by 89 percent and 85 percent respectively.

On the flip side, the number of loss making companies is likely to reduce to six from 16 that reported a net loss during the year-ago quarter. Tata Motors is likely to report a net profit of Rs 4,560 crore during the September quarter, compared to a net loss of Rs 945 crore that it reported during the same period last year. Similarly, Zomato is also likely to report a net profit, compared to last year’s Rs 251 crore loss.

Vijay Jaising of JM Financial Services told CNBC-TV18 that he expects the market to move sideways over the short-to-medium term. “But as the earnings trajectory keeps on moving towards India and everything is pointing towards a 15-16 percent earnings CAGR this year and next, you will start seeing the market also move upward as we move towards elections,” he added.

Earnings for the September quarter begin next week with TCS starting for largecap companies on October 11.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gujarat Gas hikes prices for Morbi customers second time in a fortnight

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Natural gas distribution company Gujarat Gas on September 1 hiked gas prices for customers in Gujarat’s Morbi for the second time in a fortnight. The price has been hiked Rs 2.5 per standard cubic meter of gas (scm) to Rs 43.3/scm effective today.

The state-run Gujarat Gas had earlier on August 21 announced a Rs 2.50 price hike in industrial gas — to Rs 40.83 per scm from the current Rs 38.43 per scm.

The price hike comes against the backdrop of rising global gas prices. It must be noted that Gujarat Gas imports most of its gas.

Prior to the hike in industrial gas last month, Gujarat Gas had implemented five consecutive price cuts in 2023. Sources had earlier told CNBC-TV18 that the price increase was due to increased spot liquefied natural gas (LNG) prices.

In August, Gujarat Gas reported a 43.4 percent year-on-year (YoY) decline in net profit at Rs 215.1 crore for the April to June quarter. In its quarterly earnings report, the company said its industrial sales volumes increased to 5.88 mmscmd (million metric scm per day) from 5.36 mmscmd in the preceding quarter — an increase of 10 percent.

This was due to softer spot LNG prices, the benefit of which was passed to industrial customers to make natural gas more competitive to alternate fuels, the company had said.

Following the development, Gujarat Gas share were trading almost a percent higher at Rs 453.60 at Rs 11:56 am.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow