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 Indian city gas distributor Gujarat Gas posted a more than 26% drop in second-quarter profit on Thursday, hurt by lower selling prices and steep competition.

Standalone net profit after tax fell to 2.98 billion rupees ($35.82 million) in the three months ended Sept. 30 from 4.04 billion rupees a year earlier.

Revenue from operations dropped more than 2% to 39.91 billion rupees.

For further results highlights, click [FWN3C33J0]

KEY CONTEXT

City gas distributors have cut their prices this year to pass on the benefits of falling global gas prices amid stringent competition.

For the sector, volume growth is key as gas prices have slid from fiscal 2023 levels, analysts said, adding rising demand for the cleaner propane fuel would also hurt their bottomline.

However, Peers Indraprastha Gas and Mahanagar Gas have posted a rise in their quarterly profit, helped by lower expenses and strong demand.

Gujarat Gas had reported a profit fall in the previous two quarters as well.

PEER COMPARISON

Valuation (next 12 months) Estimates (next 12 months) Analysts' sentiment

RIC PE EV/EBITDA Revenue growth Profit growth Mean rating* # of analysts Stock to price target** Div yield (%)

Gujarat Gas Ltd 19.17 11.82 6.00 7.21 Hold 16 0.83 1.62

Indraprastha Gas 14.61 9.58 -1.39 13.11 Buy 16 0.74 3.37

Ltd

Mahanagar Gas Ltd 9.64 5.11 -2.47 12.32 Buy 22 0.88 2.56

* Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell ** Ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT

JULY-SEPTEMBER STOCK PERFORMANCE

-- All data from LSEG

-- $1 = 83.1950 rupees