Gujarat Gas - Industrial Volumes Post Big Price Hike Key To Outlook: ICICI Securities
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ICICI Securities Report
Gujarat Gas Ltd. has hiked compressed natural gas price by Rs 2.5/kg to partly pass on administrative price mechanism gas price rise on October 01 and gas price for industrial consumers by Rs 9.5/ standard cubic meter (25%) to pass on spot liquefied natural gas surge; Gujarat Gas had hiked prices for industrial consumers by 13% on August 24, 2021.
At futures as of October 05, 2021, average spot LNG is at $34/ metric million British thermal unit in October 2021-March 2022.
The company’s FY22E margin would depend on its industrial sales volumes in H2 FY22E; for volumes in excess of six million metric standard cubic meter per day, Gujarat Gas would have to buy very expensive spot LNG, which would hit its margins.
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