Nomura has maintained its ‘Reduce’ rating on Gujarat Gas with a target price of ₹470, after the company’s Q4FY25 performance missed expectations due to weaker-than-anticipated volumes. Despite better margins driven by lower input costs, the topline impact from subdued gas offtake weighed on the operating performance.
Gujarat Gas reported total volumes of 9.3 mmscmd, down 4% YoY and 5% below Nomura’s estimates, largely impacted by weakness in industrial demand. While the gross margin beat estimates — aided by a 4% lower-than-expected raw material cost of ₹438.9/scm — it was not sufficient to offset the impact of lower volumes.
As a result, Q4 EBITDA fell short of expectations, underscoring the company’s vulnerability to volume cyclicality in its core segments.
Disclaimer: This article is based on the brokerage report by Nomura. It does not constitute investment advice.
