Gujarat Gas Navigates Market Dynamics with Strategic Growth and Green Initiatives in Q2 FY26

Gujarat Gas Limited, a leading player in India's city gas distribution sector, has reported its financial and operational performance for the second quarter of Financial Year 2026, ending September 30, 2025. The company's results reflect a period of strategic maneuvering amidst market challenges, particularly in its industrial segment, while demonstrating robust growth in its Compressed Natural Gas (CNG) business and advancing key green energy initiatives. The company's standalone revenue from operations stood at ₹3,979 crore, with a Profit After Tax (PAT) of ₹281 crore for the quarter.

Despite a slight dip in overall operational performance compared to the previous quarter, Gujarat Gas maintained a healthy EBITDA of ₹520 crore. The management highlighted that the industrial segment, a significant contributor to the company's volumes, experienced an approximate 8% decrease in sales volume, primarily attributed to the Janmashtami festival and intense competition from propane pricing. This dynamic led to Morbi volumes remaining muted. However, the company's proactive approach to market realities is evident in its strategic decision to explore entry into the propane distribution market, aiming to retain its customer base and mitigate competitive pressures.

The CNG segment emerged as a strong growth driver, showcasing a robust 13% year-over-year increase in sales volumes. This growth underscores the effectiveness of GGL's infrastructure expansion efforts and strong customer adoption. The company's focus on an asset-light model, particularly through the Fully Dealer Owned Dealer Operated (FDODO) stations, is gaining traction, with the first such station commissioned in Jamnagar and approximately 74 agreements executed. This strategy is poised to accelerate future growth and expand GGL's footprint across various geographies.

Gujarat Gas is also making significant strides in its commitment to environmental, social, and governance (ESG) principles. The successful completion of a green hydrogen blending pilot project at Hazira, achieving an 8% blend in PNG, marks a crucial step towards cleaner energy solutions. Furthermore, the company is a pioneer in Compressed Bio Gas (CBG) blending, having commissioned India's first CBG off-take facility at Batala, Gurdaspur, and expanding its off-take locations and agreements in Q2 FY26. These initiatives not only align with national green energy goals but also position GGL as a leader in sustainable energy transition.

In a significant corporate development, the Composite Scheme of Amalgamation and Arrangement received overwhelming approval from shareholders, with 100% of GSPC shareholders and 99.99% of GGL and GSPL shareholders voting in favor. This strategic restructuring, aimed at consolidating business verticals and unlocking stakeholder value, is expected to be completed by December 2025, with the listing of GSPL Transmission Limited (GTL) by February 2026. This move is anticipated to streamline the corporate structure and enhance business synergy.

Gujarat Gas's digital transformation journey is also gaining momentum, with significant milestones achieved in Q2 FY26. Plans include expanding the ERP ecosystem, leveraging AI-powered analytics for enhanced decision-making, and implementing a robust SCADA system for centralized monitoring. These technological advancements are set to boost operational excellence and efficiency.

Despite the competitive landscape and volume fluctuations in certain segments, Gujarat Gas Limited demonstrates strategic clarity and disciplined execution. The company's strong credit profile, debt-free balance sheet, and proactive approach to green energy and digital transformation underscore its resilience and forward-looking vision. Management's guidance for a capital expenditure of approximately ₹800 crore for FY26 and an EBITDA margin of 4.5-5.5 per SCM for FY26 reflects a confident outlook, reinforcing investor trust in its sustained growth trajectory and commitment to delivering value.