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Prabhudas Lilladher Report
We interacted with one of the largest Morbi based unlisted ceramic majors to better understand demand trends, opportunities and its impact on Gujarat Gas Ltd. Morbi accounted for over 90% of India’s ceramic production and ~60% of the company's gas demand. While demand remains robust post pandemic, sharp increase in gas prices and continued high freight rates have led Morbi’s ceramic industry to operate at ~85% utilisation from over 95% a year back.
Our key observations are-
another round of gas price hike is expected shortly and adverse economics have led to higher usage of propane of 1 million metric standard cubic metre per day,
we expect Gujarat Gas’ margins to bottom in Q3 at Rs 2.5/standar cubie metre and improve in Q4, due to pricing intervention and
any resolution in Ukraine crisis and forward movement in certification of the Nord Stream II pipeline will ease spot liquefied natural gas prices and support margins.
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