Gujarat Gas

CMP: | 565 Target: | 655 (16%) Target Period

Gujarat Gas Limited (GGL) is India's largest City Gas Distribution (CGD) GGL is strategically aligned to energize
Company in terms of sales volume, with 27 CGD licenses spread across 43 India's natural gas vision.
districts in 6 states and 1 Union territory in the states of Gujarat, Maharashtra,
Rajasthan, Haryana, Punjab and Madhya Pradesh and Union Territory of Dadra
& Nagar Haveli.
Ss

GGL continues to hold the leadership position in CGD industry in terms of size Particulars
and scale of operation, with more than 16.50 lakhs households, over 13,500 Particu lar Am o u n t
commercial customers, 653 CNG stations, close to 4,300 industrial units and Market Capitaliz ation ( ₹ Crore) 38,894.6
over 32,000 kilometre of natural gas pipeline network. The Company flows Total Debt (FY 20) ( ₹ Crore) 1,943.0
total gas volume close to 11.40 mmscmd. Cash and Investments (FY 20) 693.2
GGL is committed to reach out to every possible natural gas user in its EV (₹ Crore) 40,144.4
expanded GAs. The size and scale of the combined entity gives it the ability to s

52 w eek H/L 580/244 ss

achieve efficiencies and effectively manage the transformational changes in Equity capital ( ₹ Crore) 137.7
the sector. This major gain in productivity would benefit all the key Face value (₹) 2.0
stakeholders i.e. Customers and Shareholders.
GGL is recently awarded with Business Today’s Best CEO Award 2020 in the Oil
& Gas category, Business Standard STAR PSU Award 2020 and has been
recognised as an Honoured Company, ranked amongst Top 3 for the Best
Investor Relations Programme in the Energy Sector across Asia (ex-Japan and
Mainland China) by Institutional Investor in the 2021 All-Asia Executive Team
rankings.

Shareholding Pattern - Gujarat Gas Ltd.

Holder's Name % Share Holding

Promoters 60.89%

Foreign Institutions 7.72%

Banks Mutual Funds 7.9%

Others 17.51%

General Public 5.85%

Financial Institutions 0.13%

Key Financial Summary

Key Financials FY17 FY18 FY19E FY20E FY21E CAGR (FY19-21E)

Revenue (| crore) 2,239.1 2,452.9 3,056.8 3,362.8 3,578.1 8.2
EBITDA (| crore) 644.2 780.6 885.5 1,089.6 1,106.3 11.8
PAT (| crore) 393.4 477.9 546.5 818.2 762.9 18.2
EPS(|) 39.8 48.4 55.3 82.8 77.2
P/E (x) 25.3 20.8 18.2 12.2 13.0
P/Book (x) 5.4 4.7 4.1 3.3 2.9
RoCE (%) 29.8 31.9 31.5 31.5 27.1
Management:-

Shri Pankaj Kumar, IAS

Chairman
Shri Pankaj Kumar, IAS is the Chief Secretary of Gujarat State. Shri Pankaj Kumar is a Senior IAS Officer of 1986 batch. He
has done his B. Tech (Civil Engineering) from IIT, Kanpur and MBA (Public Policy & Management) from ICPE, Ljubljana.

He has wide experience in various departments such as Revenue, Home, Health and Family Welfare, Agriculture and
Disaster & Relief Management in various capacities. He has also served in state PSUs like Gujarat Maritime Board (GMB),
Gujarat State Road Transport Corporation, Gujarat Mineral Development Corporation etc. He worked as Collector and
DDO in several districts as well. He also served as Addl. Principal Secretary to Honorable Chief Minister, Gujarat. He
worked as Additional Chief Secretary, Home Department, Government of Gujarat before his appointment as Chief
Secretary.

Dr. Rajiv Kumar Gupta, IAS

Director
Dr. Rajiv Kumar Gupta, IAS is an officer of 1986 batch of Indian Administrative Services. He is presently the Additional
Chief Secretary, Industries and Mines Department, Govt. of Gujarat and the Managing Director of Sardar Sarovar Narmada
Nigam Ltd. Dr. Gupta holds a degree in Political Science and is a Gold Medalist. He also holds post graduate degree in
Political Science and Ph.D. (International Law), in addition to having done specialized courses in Law, International Trade
and Environment from United Nations University and University of Melbourne. Dr. Gupta has worked in various
Government departments, both in Government of Gujarat and Government of India. Dr. Gupta has also headed foreign
assignments and worked as Advisor Director at GAP Regional Dev Administration (UNDP) Turkey. He also possesses vast
experience of heading various Govt. Public Sector Undertakings, both listed and unlisted, various Government regulatory
bodies etc.

Shri Sanjeev Kumar, IAS

Managing Director
Shri Sanjeev Kumar, IAS is Managing Director of Gujarat State Petroleum Corporation Limited. He has done B. Tech
(Hons.) from I.I.T. Kharagpur and Masters in Public Affairs from Humphrey School of Public Affairs, University of
Minnesota, USA. He has very rich knowledge and wide experience of working in various Government Departments and
Public Sector Undertaking.

He has held distinguished positions in Government of Gujarat including Collector of Kheda & Gandhinagar. He has vast
experience in Finance Department wherein he has served as Addl. Secretary (Budget), Secretary (Expenditure) and
Secretary (Economic Affairs) in Government of Gujarat.

SWOT ANALYSIS:-

Strengths of Gujarat Gas Co.

- Diverse Revenue models - Over the years Gujarat Gas Co. has ventured into various businesses outside the
Utilities sector. This has enabled the company do develop a diversified revenue stream beyond Utilities sector and
Natural Gas Utilities segment.
- High margins compare to Natural Gas Utilities industry's competitors - Even though Gujarat Gas Co. is facing downward
pressure on profitability, compare to competitors it is still racking in higher profit margins.
- Wide geographic presence - Gujarat Gas Co. has extensive dealer network and associates network that not only
help in delivering efficient services to the customers but also help in managing competitive challenges in Natural Gas
Utilities industry.
- Brands catering to different customers segments within Natural Gas Utilities segment - Gujarat Gas Co. extensive
product offerings have helped the company to penetrate different customer segments in Natural Gas Utilities segment. It
has also helped the organization to diversify revenue streams.
- Track record of innovation - Even though most players in the Utilities strive to innovate, Gujarat Gas Co. has
successful record at consumer driven innovation.
- Strong brand recognition - Gujarat Gas Co. products have strong brand recognition in the Natural Gas Utilities industry.
This has enabled the company to charge a premium compare to its competitors in Natural Gas Utilities industry.

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Weaknesses of Gujarat Gas Co.

- Low investments into Gujarat Gas Co.'s customer oriented services - This can lead to
competitors gaining advantage in near future. Gujarat Gas Co. needs to increase investment into research and
development especially in customer services oriented applications.
- High turnover of employees at the lower levels is also a concern for the Gujarat Gas
Co. . It can lead to higher salaries to maintain the talent within the firm.
- Declining market share of Gujarat Gas Co. with increasing revenues - the Natural Gas
Utilities industry is growing faster than the company. In such a scenario Gujarat Gas Co. has to carefully analyze the
various trends within the Utilities sector and figure out what it needs to do to drive future growth.
- Niche markets and local monopolies that companies such as Gujarat Gas Co. able to exploit are fast disappearing. The
customer network that Gujarat Gas Co. has promoted is proving less and less effective.
- Gross Margins and Operating Margins which could be improved and going forward may put pressure on
the Gujarat Gas Co. financial statement.
- Declining per unit revenue for Gujarat Gas Co. - competitiveness in the Natural Gas Utilities
industry is putting downward pressure on the profitability.

Opportunities for Gujarat Gas Co.

- Increasing government regulations are making it difficult for un-organized players to operate in the
Natural Gas Utilities industry. This can provide Gujarat Gas Co. an opportunity to increase the customer base.
- Lower inflation rate - The low inflation rate bring more stability in the market, enable credit at lower
interest rate to the customers of Gujarat Gas Co.. This will increase the consumption of Gujarat Gas Co. products.
- Local Collaboration - Tie-up with local players can also provide opportunities of growth for the Gujarat Gas
Co. in international markets. The local players have local expertise while Gujarat Gas Co. can bring global processes and
execution expertise on table.
- Lowering of the cost of new product launches through third party retail partners
and dedicated social network. Gujarat Gas Co. can use the emerging trend to start small before scaling up
after initial success of a new product.
- Customer preferences are fast changing - Driven by rising disposable incomes, easy access to
information, and fast adoption of technological products, customers today are more willing to experiment / try new
products in the market. Gujarat Gas Co. has to carefully monitor not only wider trends within the Natural Gas Utilities
industry but also in the wider Utilities sector.
- Trend of customers migrating to higher end products - It represents great opportunity for
Gujarat Gas Co., as the firm has strong brand recognition in the premium segment, customers have experience with
excellent customer services provided by Gujarat Gas Co. brands in the lower segment. It can be a win-win for the
company and provides an opportunity to increase the profitability.

Theat to Gujarat Gas Co.

- Saturation in urban market and stagnation in the rural markets - For Gujarat Gas Co. this
trend is an ongoing challenge in the Natural Gas Utilities segment. One of the reasons is that the adoption of products is
slow in rural market. Secondly it is more costly for Gujarat Gas Co. to serve the rural customers than urban customers
given the vast distances and lack of infrastructure.
- Competitive pressures - As the new product launch cycles are reducing in the Utilities industry. It has put
additional competitive pressures on players such as Gujarat Gas Co.. Given the large customer base, Gujarat Gas Co. can't
respond quickly to the needs of the niche markets that disruptors are focusing on.
- Competitors catching up with the product development - Even though at present the Gujarat
Gas Co. is still leader in product innovation in the Natural Gas Utilities segment. It is facing stiff challenges from
international and local competitors.
- Growing technological expertise of local players in the export market - One of the biggest threat of tie-up with the
local players in the export market for Gujarat Gas Co. is threat of losing IPR. The intellectual property rights framework is
not very strong in emerging markets especially in China.

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Competition:-

Adani Gas Limited

Adani Gas Limited (AGL) was incorporated on August 5th 2005 in Navrangpura Ahmedabad. The Company is engaged in
City Gas Distribution (CGD) business and supplies natural gas to transport domestic commercial industrial and vehicle
users in 13 geographical areas. The Operations of AGL is spread across Ahmedabad Vadodara Faridabad and Khurja
location. The Company is having 82 CNG ?lling stations as on March 31 2019 with compression capacity of 2.0 million
Kg/day thus providing the gas to ~ million vehicles. It also supplies PNG to more than 0.38 million domestic customers
2500 commercial customers and 1300 industrial customers through a connected pipeline network over 6661 km including
430 km of steel and 6231 km of polyethylene pipeline.During the year 2017 Adani Enterprises Limited transferred
256742040 (100%) equity Shares of the Company to Adani Gas Holdings Limited. Accordingly the Company has become
whollyowned Subsidiary Company of Adani Gas Holdings Limited w.e.f. 29th March 2017 and continues to be a step-down
100% subsidiary of Adani Enterprises Limited.During the year under review the Board of Directors at its meeting held on
18th January 2018 had approved the Composite Scheme of Arrangement among Adani Gas Holdings Limited (AGHL) and
Adani Gas Limited (the Company) and Adani Enterprises Limited (AEL) and their respective
Adani Total Gas is developing City Gas Distribution (CGD) Networks to supply the Piped Natural Gas (PNG) to the
Industrial, Commercial, Domestic (residential) and Compressed Natural Gas (CNG) to the transport sector. Natural Gas is a
convenient, reliable and environment friendly fuel that allows consumers to enjoy a high level of safety, convenience and
economic efficiency.

Indraprastha Gas
IGL continues to augment its infrastructure so as to meet the increasing demand of CNG arising out of growing number of
CNG vehicles in Delhi. The growth drivers for increase in demand of CNG are - car manufacturers coming up with CNG
variants and Delhi Government’s directive making it mandatory for all LCVs operating in Delhi to run on CNG. The
company is in the process of enhancing its compression capacity by adding new stations.
On the PNG front, IGL is already operating in the residents of the areas of NCT of Delhi; districts Gautam Budh Nagar,
Ghaziabad, Hapur, Muzaffarnagar, Shamli, uncovered parts of Meerut & Kanpur, Fatehpur and Hamirpur in Uttar Pradesh;
districts Rewari, Gurugram, Karnal and Kaithal in Haryana; and, district Ajmer, Pali & Rajsamand in Rajasthan. Our
customers will now be benefited with supply of PNG for non cooking applications like Geysers also. IGL is also planning to
expand its pipelines even further.
Industrial and commercial segments would remain one of the focus areas for the organization.

Conclusion:-

With not much rise over the years in this sector adani has the power to overtake Gujrat Gas if it does not act fast. As for
the future plans looking gloomy due to Covid and Russia In war with Ukraine only time will tell how will it adapt to this
situation.