Gujarat Gas best placed on volume growth but margin expansion must be monitored
MUMBAI: Gujarat Gas Ltd has been one of the key beneficiaries of rising commercial activities with the easing of lockdown curbs. Sales volumes have shown consistent improvement since the resumption of economic activities, and analysts expect the momentum to continue.
Having higher exposure to industrial supplies, the company is considered to be better placed than peers peers as well. Companies such as Indraprastha Gas Limited (IGL) or Mahanagar Gas Ltd (MGL) have also been seeing gains and have strong prospects. However, these two have high exposure to compressed natural gas (CNG) sales in metro towns. With metros still struggling with the spread of covid-19, uncertainties pertaining to vehicular traffic growth linger.
In the September quarter, Gujarat Gas had impressed the Street with its PNG (piped natural gas) industrial cluster volume growth of 8% year-on-year to 7.9 mmscmd (million standard cubic metre per day). Domestic PNG volumes too had grown 8% year-on-year. CNG volumes, however, had remained 13% lower on year despite improving post the easing of lockdown.
