Gujarat Gas - High Spot LNG Is Equal To Volume Growth Or Margins: ICICI Securities
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ICICI Securities Report
Press reports suggest 13% price hike by Gujarat Gas Ltd. on August 24, 2021 led to decline in September 2021 Morbi volumes by 29%.
Morbi volumes fall meant Gujarat Gas had to buy less spot liquefied natural gas, which supported its September 2021 margins.
The company’s industrial volumes may be at seven million metric standard cubic meter per day (similar to that in September 2021) in H2 FY22E if it does not make further price hikes, which may mean modest YoY rise in volumes in FY22E on the low base of FY21 but sharply lower margins and earnings per share.
Further price hikes may mean volumes fall further but boost margin also as it may mean the company does not have to buy any expensive spot LNG.
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