Gujarat Gas's Morbi volumes hit 0.36 MMSCMD in March. Management had guided 3-3.2.
The propane import strategy has flipped too. After insisting no capex was needed, management is now building its own jetty.
What's new
- Morbi ceramic cluster gas consumption crashed to 0.36 MMSCMD in March 2026, far below the January projection of 3-3.2 MMSCMD.
- By late May 2026, Morbi volumes recovered to 8 MMSCMD as 710 units (up from 83) switched from propane.
- CGD capex guidance revised to ₹1,000 cr, up from a ₹700 cr run-rate stated in January.
- Management is now pursuing its own propane import jetty and storage, reversing the January no-capex position.
Themes from the call
Morbi demand
Volumes crashed to 0.36 MMSCMD in March, then recovered to 8 MMSCMD by late May on propane substitution.
Propane strategy
Management is now building its own import infrastructure, contradicting January's no-capex assurance.
Capital allocation
CGD capex guidance rose to ₹1,000 cr, a 43% increase from the prior ₹700 cr run-rate.
Guidance watch
- Morbi volumes have upside to 8.8-8.9 MMSCMD based on customer feedback, with propane tightness expected short to medium term.
- Gas trading volume growth of 25-30% expected by 2030-31, with prices stabilizing in 2028-29.
- GTL demerger listing targeted by end-July 2026, with post-listing shares at ~93 crore.
Risk flags
- The March volume crash (0.36 MMSCMD vs guided 3-3.2 MMSCMD) exposes a misjudgment on Morbi baseline demand.
- Propane supply remains volatile; management's own jetty plans signal third-party infrastructure is not reliable.
- Power segment utilization is crisis-level, with combined cycle plants at 1-6.5% PLF.
- FY26 PAT was flat at ₹2,299 cr despite 16.4% EBITDA growth.
Key quotes
-
"At least in the short to medium term, we do not see propane coming back to normal levels."
— Gujarat Gas management -
"So there is no infra investment which is required... there is no investment which is required."
— Gujarat Gas management, Jan 2026 call
The brief
The Morbi ceramic cluster is the story, and the story is a swing. In January, management projected Morbi volumes of 3-3.2 MMSCMD by March, calling 1.7-1.8 MMSCMD a baseline floor. The actual number for March was 0.36 MMSCMD. The subsequent recovery to 8 MMSCMD by late May, as 710 units switched from propane, validates the displacement thesis but also shows how wrong the initial forecast was.
The propane narrative has also flipped. In January, management was clear: no capital investment was needed to enter propane. This quarter, they are talking about building their own import jetty and storage. The capex outlook has moved accordingly. The CGD run-rate is now ₹1,000 cr, not ₹700 cr. A McKinsey strategic review is underway.
The financials reflect the volatility. Q4 EBITDA grew 19% to ₹943 cr, but full-year PAT was flat at ₹2,299 cr. Gas trading volumes fell 19% to 10.2 MMSCMD, though profitability rose on favorable pricing and a ₹250 cr one-off from customs and Petronet settlements. CNG volumes hit a record 3.6 MMSCMD, up 12%.
The company holds a ₹1,900 cr tax loss shield, allowing years of tax-free growth. The GTL demerger is on track for a July listing. The open question is simpler: after the March miss, how much of the current 8 MMSCMD in Morbi is sustainable? Management says propane is tight for now. For now is doing all the work.
Gujarat Gas's Morbi recovery is real, but the March miss and the propane strategy reversal make the forward guidance harder to trust.