Metrics cut 1
- GTL (Sabarmati Transmission) listing deferred to early September 2026 (from July 2026)
Event Participants
Executives
2 Sandeep Dave (General Manager & Company Secretary), Avantika Singh Aulakh (Managing Director)
Analysts
10 Ajay Sharma, Amit Murarka (Axis Capital), Bineet Banka (Nomura Holdings), Deepak Malhotra (CapGrow Capital Advisors), Hardik Solanki (ICICI Securities), Indrakumar Gupta (Prabhudas Lilladher), Nitin Tiwari (PhillipCapital India), Probal Sen (ICICI Securities), Pushpendu Chand, Somaiah V. (Spark Capital Advisors), Vipul Shah (Sumangal Investments)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹9,670 crores | +63% YoY vs ₹5,924 crores in Q1 FY26, driven by strong gas trading volumes and CGD growth |
| EBITDA | ₹1,482 crores | +65% YoY vs ₹896 crores, reflecting operating leverage and strong trading margins |
| EBITDA Margin | ~15.3% | Slight improvement YoY; CGD segment margin at 5.18% (below 5.5-6.5% guidance) due to higher Morbi volumes |
| Profit After Tax | ₹998 crores | +78% YoY vs ₹561 crores in Q1 FY26 |
| Gas Trading EBIT | ₹726 crores | +206% YoY from ₹237 crores, driven by favorable dated Brent positioning and strong LNG sourcing |
| CGD Segment EBITDA | ₹544 crores (Q1 FY26) | Q1 FY26 comparative; Q4 FY26 was ₹465 crores; consolidated presentation post-merger |
| Overall Sales Volume | 15.66 mmSCMD | Comprises CGD segment 12.34 mmSCMD + external gas trading of ~3.32 mmSCMD |
| Gas Trading Volume | 12.22 mmSCMD | Includes 8.9 mmSCMD transferred internally to CGD segment |
| CGD Volume | 12.34 mmSCMD | Balanced mix across CNG, PNG-Domestic, PNG-Industrial, PNG-Commercial |
| CNG Volume | 3.76 mmSCMD | +13% QoQ vs 3.33 mmSCMD; Gujarat +12%, outside Gujarat +19% |
| PNG Industrial Volume | 7.17 mmSCMD | +64% YoY vs 4.71 mmSCMD; Morbi cluster 5.67 mmSCMD (+181% vs Q4 FY26), non-Morbi 2.04 mmSCMD |
| PNG Commercial Volume | 0.17 mmSCMD | Over 16,600 commissioned commercial customers |
| PNG Domestic Customers | 24.77 lakh households | Added ~59,000 new connections in Q1; cumulative base |
| CNG Stations | 844 | Added 6 new stations, upgraded 9 in Q1; plans for 75+ new and ~70 upgrades in FY27 |
| Pipeline Network | 45,900 km | Across 6 states and 1 union territory |
| CGD Infrastructure CapEx (Q1) | ₹127 crores | Full-year CGD CapEx guidance maintained at ~₹1,000 crores |
| Cash Balance | ₹7,200 crores | Awaiting deployment plan; detailed capital allocation strategy expected by Q3 FY27 |
| Gross Block | ~₹12,000 crores | As on 30th June |
| Dividend (FY26) | ₹835 crores | Following Government of Gujarat guidelines |
Geographic & Segment Commentary
Gas Trading: Gas trading segment delivered EBIT of ₹726 crores, up 206% YoY. Sourced 10 LNG cargoes despite geopolitical disruptions; sales volume at 12.22 mmSCMD, of which 8.9 mmSCMD was transferred internally to CGD. Sourcing mix: ~20% long-term contracts, 12.5% domestic gas, ~67% spot. Third-party volumes at ~3.3 mmSCMD are lower than the 4.5-5 mmSCMD long-term run-rate due to Middle East supply disruptions and high spot prices; normal recovery expected by FY28-29.
City Gas Distribution (CGD): CGD volumes at 12.34 mmSCMD with balanced mix. CNG volume grew 13% QoQ to 3.76 mmSCMD, with 844 stations and plans for 75+ new stations in FY27. PNG domestic added 59,000 customers (base of 24.77 lakh), supported by government policy push on LPG-to-PNG conversion (91,000 connections Jan-Jun 2026). PNG industrial grew 64% YoY to 7.17 mmSCMD, led by Morbi cluster (5.67 mmSCMD), though current run-rate has moderated to ~3 mmSCMD as propane supply from non-Middle East sources has improved. Non-Morbi industrial volumes at 2.04 mmSCMD, expected to reach 3 mmSCMD in 1.5-2 years as infrastructure in Ahmedabad Rural, Thane, Kutch and other GA regions matures; 86 new industries added in the quarter.
Exploration & Production / Renewables: E&P segment EBITDA of ₹7 crores (Q1 FY26) and renewables at ₹14 crores (Q1 FY26) remain small contributors; the integrated model provides diversification across the energy value chain.
Company-Specific & Strategic Commentary
Post-Merger Integration: Completed listing of additional equity shares pursuant to the merger scheme; positioned as one of India's leading integrated energy companies across gas trading, CGD, E&P, and renewables. Integrated model enabled sourcing strength and operational synergies.
Propane Import Terminal: Company shortlisted sites in Gujarat for setting up a dedicated propane import and storage facility near the Morbi market; DPR underway, CapEx to materialize over next 4 years. This strategic infrastructure would reduce exposure to propane supply disruptions.
Long-Term LNG Sourcing: Company signed term contracts with Qatar, Uniper, and Total; currently in market for additional long-term volumes starting 2028. Target of ~2 million tons on term contracts by 2028, growing to ~4 million tons by 2030. New long-term contracts will be partially contracted on back-to-back basis to mitigate pricing risk.
Tax Refund/Unabsorbed Losses: Process of filing revised returns for merger unabsorbed losses (FY24-25 and FY25-26); expected refund of ~₹900 crores, anticipated within a year.
Power Business Strategy: GSEG (351 MW) at ~6% PLF and Pipavav at ~1% PLF; management exploring revival strategies including back-to-meter deals with data centers; concrete plan expected in coming months.
GTL Listing: Sabarmati Transmission Ltd. expected to list by early September 2026, subject to SEBI exemption for listing without public issue route.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Gas Trading EBIT (FY27) | ~₹1,100-1,200 crores | Maintained despite strong Q1 (₹726 crores); conservative basis given ongoing Middle East volatility; management sees no reversal risk in Q2 |
| CGD EBITDA Margin (FY27) | 5.5-6.5% | Maintained; Q1 came in at 5.18% due to higher volume denominator and Morbi mix; portfolio approach |
| CGD CapEx (FY27) | ~₹1,000 crores | Maintained; excludes propane terminal CapEx (early stage) |
| CNG Growth | ~12-13% ongoing | CNG volume growth expected to sustain for next 2 years; supported by 75+ new stations in FY27 |
| Non-Morbi Industrial Volume | ~3 mmSCMD in 1.5-2 years | From current ~2-2.2 mmSCMD; driven by infrastructure build-out and stabilizing LNG prices |
| Gas Trading Third-Party Volume | 4.5-5 mmSCMD (FY28-29) | Recovery from current ~3.3 mmSCMD; driven by more reasonable global pricing in 2028-29 |
| Gas Sourcing (FY28) | ~2 million tons term; ~4 million tons by 2030 | In market for additional long-term contracts starting 2028 |
| Cash Deployment Plan | By Q3 FY27 | Concrete plan on utilization of ₹7,200 crores cash across CNG/pipelines and energy diversification |
| Q2 Guidance | Better clarity post-Q2 numbers | Middle East volatility limits near-term precision |
| Tax Refund | ~₹900 crores within a year | Revised returns being filed for FY24-25 and FY25-26 |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical/Middle East Disruption | Continued conflict impacts global LNG supply and pricing; management hedged by sourcing from diversified suppliers but spot price volatility (currently ~$20) remains a margin risk for both trading and CGD industrial volumes |
| Morbi Volume Erosion to Propane | Propane availability improving (from USA, Venezuela) at ₹65 vs gas at ₹78 in Morbi; volumes have declined from 8 mmSCMD peak to ~3 mmSCMD. Management estimates a floor of ~1.8-2 mmSCMD from customers without propane infrastructure, but further erosion to alternate fuels possible if pricing gap sustains |
| High Spot Exposure | ~67% of gas sourcing remains spot; Morgan Stanley analyst noted repeated supply shocks and management struggle to lock long-term volumes. Management mitigating by signing term contracts (Qatar, Uniper, Total) with more expected for 2028+ |
| LNG Price Uncertainty | New supply wave delayed due to Iran situation; timeline for reasonable pricing keeps shifting, impacting CGD volume ramp-up and third-party trading volumes |
| Power Business Underperformance | Gas-based power plants at 1-6% PLF; no clear revival timeline, though management exploring strategies including data center supply deals |
| GTL Listing Delay | Sabarmati Transmission listing pushed from July to early September; coordination with SEBI/BSE/NSE for exemption may take longer |
Q&A Highlights
Volume Reconciliation / Intercompany Transfers
- Question: How to reconcile overall sales of 15.66 mmSCMD with gas trading 12.22 and CGD 12.34? (Probal Sen, ICICI Securities)
- Answer: CGD segment volume of 12.34 mmSCMD less intercompany transfer of 8.9 mmSCMD from gas trading = 3.32 mmSCMD external. Gas trading total 12.22 mmSCMD includes 8.9 mmSCMD internal transfer + 3.32 external third-party sales. (Sandeep Dave)
Morbi Cluster Dynamics — Volumes and Pricing
- Question: What is current Morbi run-rate, propane competition impact, and pricing? (Probal Sen, ICICI Securities)
- Answer: Gas sales currently ~3 mmSCMD in Morbi (down from 8+ mmSCMD in May-June); propane equivalent ~5.3-5.4 mmSCMD. Pricing: gas at ~₹78/SCM vs propane ~₹65/SCM. Customers remaining on gas lack propane infrastructure (smaller units or space constraints); floor volume of ~1.8-2 mmSCMD historically. Contracts on one-month basis. (Sandeep Dave)
Margins — Gas Trading and CGD
- Question: Why was gas trading margin so high in Q1? Any reversal risk in Q2? (Bineet Banka, Nomura)
- Answer: Sourced gas at favorable times; dated Brent advantage on long-term agreements boosted margins. No negative quarter expected — guidance of ₹1,100 crores FY27 gas trading EBIT maintained on conservative basis. Margins are not per SCM but 4-5% overall on a percentage basis. (Sandeep Dave)
CGD Margin Below Guidance
- Question: Why was CGD EBITDA margin at 5.18% vs 5.5-6.5% guidance? (Amit Murarka, Axis Capital)
- Answer: Portfolio view; larger volume denominator and Morbi mix weighing; guidance of 5.5-6.5% maintained for FY27. (Sandeep Dave)
Sourcing Mix and Contract Portfolio
- Question: What is the sourcing mix and how will new LNG contracts (Uniper, Qatar, Total) impact margins? (Bineet Banka, Nomura / Hardik Solanki, ICICI Securities)
- Answer: Overall sourcing: 20% term, 12.5% domestic (HPSC), ~67% spot; ~20% of long-term is Henry Hub-linked. New long-term contracts will be partially contracted on back-to-back basis to reduce exposure; expected to improve profitability and CGD stability. (Sandeep Dave)
Long-Term LNG Sourcing Strategy
- Question: What's holding back aggressive long-term sourcing? (Morgan Stanley)
- Answer: Not demand confidence; supply shock timelines have shifted (Iran situation delayed new LNG wave). Currently sourcing for volumes starting 2028; signed Qatar, Uniper, Total contracts; target ~2 million tons by 2028 and ~4 million tons by 2030. Integration increases confidence for such commitments. (Sandeep Dave)
Non-Morbi Industrial Growth
- Question: Pricing is only constraint? Volumes have been flat for 2-3 years. (Probal Sen, ICICI Securities)
- Answer: Not just pricing — infrastructure development in Ahmedabad Rural, Thane, etc. is in advanced stages. Added 86 new industrial industries in Apr-Jun; expectation of 3 mmSCMD non-Morbi volumes in 1.5-2 years as LNG prices stabilize. Alternate fuels vary by region: furnace oil (Ankleshwar), briquettes/solid fuels elsewhere. (Sandeep Dave)
Cash Deployment and Dividend Policy
- Question: How will ₹7,200 crores cash be deployed? Dividend policy relook? (Deepak Malhotra, CapGrow; Pushpendu Chand)
- Answer: Following Government of Gujarat dividend guidelines (₹835 crores paid FY26). CapEx ~₹1,000 crores for CGD; remaining cash will be deployed toward CNG, pipelines, and energy diversification. Concrete plan by Q3 FY27. Propane terminal CapEx excluded (early-stage DPR; 4-year timeline). (Sandeep Dave)
Power Business Strategy
- Question: What is plan for power plants at 1-6% PLF? (Morgan Stanley)
- Answer: GSEG (351 MW) at ~6% PLF, Pipavav at ~1%; operating only during peak summer demand. Exploring multiple strategies including back-to-meter deals with data centers; turnaround plan to be shared with investors in coming months. (Sandeep Dave)
GTL (Sabarmati Transmission) Listing Status
- Question: When will GTL list? (Bineet Banka, Nomura)
- Answer: Coordinating with BSE/NSE/SEBI on exemption for listing without public issue route; expected early September 2026. (Sandeep Dave)
Tax Refund Status
- Question: Where is the merger-related tax refund process? (Amit Murarka, Axis Capital)
- Answer: Filing revised returns for FY24-25 and FY25-26; expected refund ~₹900 crores within a year. (Sandeep Dave)
Key Takeaway
Gujarat Energy delivered a strong Q1 FY27 with revenue up 63% YoY to ₹9,670 crores, EBITDA up 65% to ₹1,482 crores, and PAT up 78% to ₹998 crores, driven by a 206% surge in gas trading EBIT (₹726 crores) benefiting from favorable dated Brent positioning amid Middle East disruption. The integrated post-merger model supported 10 LNG cargoes sourced, CNG volume growth of 13% QoQ to 3.76 mmSCMD, and PNG industrial volumes up 64% YoY to 7.17 mmSCMD. However, Morbi cluster gas volumes have moderated from 8+ mmSCMD to 3 mmSCMD as propane availability improves (₹65 vs ₹78/SCM for gas), with management guiding a floor of ~2 mmSCMD. Strategic priorities include expanding CNG network (75+ new stations), securing long-term LNG contracts (2 million tons by 2028, 4 million by 2030), developing a propane import terminal near Morbi, and deploying ₹7,200 crores cash with a concrete plan by Q3. Management maintained FY27 guidance of gas trading EBIT at ₹1,100-1,200 crores and CGD margin at 5.5-6.5%, while flagging continued geopolitical uncertainty and high spot exposure (67%) as key watchpoints. Non-Morbi industrial volumes and third-party trading volumes are expected to recover toward 3 mmSCMD and 4.5-5 mmSCMD respectively as LNG pricing stabilizes by FY28-29, and Sabarmati Transmission listing is expected by early September 2026.