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Gujarat Energy (GEL) reported merged quarterly results in Q4FY26. Standalone EBITDA/APAT at Rs7.8/5.7bn was up 34%/86% YoY, but down 18%/19% QoQ. CGD business volume was down 5% YoY to 8.9mmscmd (up 6% QoQ); at a 5% beat. EBIT at Rs3.3bn was down 19% YoY and 2% QoQ, while implied EBITDA margin seems below estimate. Gas Trading EBIT fell 21% QoQ to Rs4.1bn (up 127% YoY). For full FY26, standalone merged EBITDA/PBT (before exceptionals) was up 2% each (albeit including transmission in FY25 – hence not comparable), with FY26 APAT/AEPS at Rs23.5bn/25.0. CGD/Gas Trading EBIT was down 8%/up 9% YoY, with volume down 10%/19% and EBIT/scm up 2%/35%. GSPL Transmission (GTL) also published revised numbers, with FY26 SA revenue/PAT at Rs12.5/4.1bn and volume at ~28mmscmd; GTL’s AEPS was Rs13. Q4 pipeline volume was 27.2mmscmd, with a 25% decline in volumes from Feb-26 to Mar-26, as a fallout from the Middle East (ME) conflict. GEL’s management indicated that Morbi volume recovered from 0.36mmscmd (supplying 83 units) at the peak of the crisis in Mar-26 to 7.8mmscmd (supplying 675 units) by late-May, and sales logged some profit. Also, GEL aims to secure more term contracts, for posting a stable and diversified sourcing mix. While GTL has been separated from GEL financially, GEL’s pricing still includes the GTL value, as the record date for the spin-off is yet to be announced. We are reassessing earnings, valuations, and recommendations for GEL and GTL versus our REDUCE and ADD recommendation earlier for Gujarat Gas and GSPL, respectively. We hence put both the entities ‘Under Review’.

Result Highlights

GEL reported exceptional items of Rs630mn related to stamp duty charges for the amalgamation, along with provisions toward royalty and interest in non-operated upstream blocks. Accordingly, RPAT came in at Rs5.2bn in Q4. Other income rose 28% QoQ to Rs1.6bn (down 21% YoY), while ETR was higher at 28%. IPNG volumes beat our estimate by 13% at 4.2mmscmd (up 7% QoQ; down 17% YoY), driven by a ramp-up in Morbi. CNG volume at 3.6mmscmd was up 12% YoY and 4% QoQ, beating our estimate by 2%, supported by network expansion. E&P EBIT loss expanded to Rs142mn in Q4FY26 from Rs114mn in Q3FY26, while power EBIT was better at Rs68mn vs EBIT loss of Rs29mn in Q3. The company declared a final dividend of Rs8.9/sh (~36% annual payout). Net Worth as of FY26-end was Rs185bn or Rs197/sh.

Management KTAs

During FY26, the company signed two long-term LNG SPAs – one each with Qatar Energy and Uniper, aggregating up to 1.36mmtpa (~4.9mmscmd equivalent). Of the two, the contract with Qatar Energy has already commenced, while that with Uniper starts from CY28. The Shell contract runs till CY30, with Qatar till CY28, TotalEnergies till CY35, and Uniper till CY37. The newly signed Qatar contract ramps up gradually, from CY26 to 1mmtpa by CY30, and extends for ~17 years. TotalEnergies contract is for 6 cargos annually, Shell is for ~15 cargos annually, and Uniper for 6 cargos annually. CGD (GGL) gas sourcing mix currently comprises ~2mmscmd of APM gas, ~0.4-0.5mmscmd of NWG gas, ~3.5mmscmd of long-term LNG, and ~3.5mmscmd of short-term LNG. Majority of the long-term contracts are Brent-linked. Overall gas volume is currently ~14mmscmd, of which ~5.5mmscmd pertains to pure gas trading while the balance is the intersegment transfer to the CGD segment and domestic allocation. The gas trading portfolio primarily serves CGD companies (50-53% of volume), fertilizer companies (~27%), and the balance serving refineries, power, and industrial customers. Despite the high gascost environment, current supplies to Morbi are profitable. Currently, Morbi customers are entering into contracts for one month. At current forex levels, Morbi IPNG is priced at Rs76/scm, while having increased for Jun-26 to Rs77-78/scm. CGD EBITDA guidance is broadly stable at Rs5-6/scm, with a possible upside toward Rs6-6.5/scm in favorable conditions. FY27 capex guidance for the CGD business stands at ~Rs10bn, while E&P capex guidance stands at ~Rs1bn, largely toward drilling activities

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