Gujarat Energy reports a 78% increase in profit after tax in Q1 FY27, driven by a surge in gas trading, rising CNG volumes, and strategic plans for network growth amidst a transition to an integrated energy player.
Gujarat Energy said its first-quarter profit rose sharply as gas trading, compressed natural gas sales and industrial pipeline volumes all expanded, while the company pressed ahead with plans to use its enlarged balance sheet for further investment. GuruFocus reported that revenue for Q1 FY27 climbed 63% from a year earlier, EBITDA rose 65% and profit after tax increased 78%, underscoring a strong start to the financial year.
The biggest driver was the gas trading business, where EBIT jumped 206% year on year to INR726 crore. Management said the result reflected favourable timing in sourcing, helped by long-term contracts linked to Brent prices on an ageing basis. Even so, the company kept its full-year guidance unchanged at about INR1,100 crore of profit from gas trading, signalling that it sees the quarter as unusually strong rather than a new baseline.
In the city gas distribution business, volumes continued to rise. Company secretary Sandeep Dave said CNG sales reached a record 3.76 million standard cubic metres a day, up 13% quarter on quarter, and Gujarat Energy plans to add more than 75 new stations this year while upgrading about 70 existing outlets. Industrial PNG volumes also gained momentum, with the Morbi ceramic cluster recording a 181% increase, although the company acknowledged that Morbi gas demand has eased from earlier highs as cheaper propane becomes more available.
That shift has altered the near-term mix. Dave said Morbi gas sales have normalised to around 3 mmscmd from more than 8 mmscmd in the quarter, while propane deliveries have risen as supply from countries such as the US and Venezuela has improved. The company said its current gas price is about INR78 per scm versus roughly INR65 per scm for propane, which helps explain the pressure on margins in the CGD business. Reuters-style market commentary from PL Capital and Arthneeti has also pointed to the company’s wider transition into an integrated energy player, with management targeting stronger long-term volume growth as domestic and commercial PNG connections continue to benefit from policy support.
Beyond the operating numbers, Gujarat Energy highlighted a cash balance of about INR7,200 crore after its merger and listing. Around INR1,000 crore is already set aside for CGD capital expenditure this year, while the rest is being considered for network expansion, diversification and possible propane infrastructure near Morbi. The company said it is studying sites in Gujarat for an import and storage facility, expects to outline a broader deployment plan by the third quarter and is working towards a separate listing of GTSG transmission in early September. It also expects to pursue roughly INR900 crore of tax refunds linked to revised returns after the merger, though that process is likely to take at least a year.
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