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Motilal Oswal Report
Gujarat Gas Ltd. has taken a price cut of Rs 2.5/ standard cubic meter on piped natural gas Industrial at Morbi, as per our interaction with the company.
Therefore, gas price realization now stands at Rs 24.5/standard cubic meter, bringing the economies of gas at par with the current low liquefied petroleum gas (LPG) prices.
According to our observation of the recent movement in prices, LPG prices fell to a record low and subsequently revived off the trough (similar to Brent prices), however, it is still down 35% YoY.
Historically, LPG prices are usually cheap during the monsoon season while prices spike during winters, driven by higher heating demand.
Industrials account for more 75% of the sales volume for Gujarat Gas – Morbi constitutes approximately 75% of the total industrial volume.
Thus, it is an uphill task for Gujarat Gas to maintain healthy economics of gas with LPG for its industrial consumers.
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