GUJARAT GAS

Gujarat Gas posted a set of encouraging numbers for Q3FY13. In the business of distribution of natural gas, the company posted a very good YoY performance with net profit soaring 182% at Rs.70 crore and QoQ, it was down 30%. Net sales at Rs.756 crore, was up 18% on YoY but QoQ was down 8%. The company has stated that the impact of price hike was mostly mitigated in 2012.  

In terms of volume of gas sold, it sold 270 million metric standard cubic metre (mmscm) in Q3 v/s 314 mmscm on YoY. Thus what really shored up the performance was the higher price realization. The company last week increased the rate of CNG by Rs 4.35/kg, affecting around one and half lakh CNG users in Surat, Bharuch, Ankleshwar and beyond. The company at present supplies CNG gas through 54 CND stations. Thus pricing power will ensure long term sustainability of margins. Earlier, there was major speculation over the 65.12% stake sale of British Gas but it all came to a rest after British Gas sold controlling stake in its Indian subsidiary to the state-owned company Gujarat State Petroleum Corporation (GSPC) for Rs 2,464 crore. BG’s shareholding was acquired by Gujarat Distribution Networks Limited (GDNL), a company in which 100% is held by GSPC Group. GDNL along with GSPC made an open offer to acquire additional 33.34 million shares constituting 26% of the fully paid-up share capital of Gujarat Gas at price of Rs 314.17 per share. This stake buying though disappointing to shareholders of the company will prove good for the company in the long run.