Gujarat Gas Q2 FY26 Results: Revenue ₹3,979 Cr, PAT ₹281 Cr; CNG volumes resilient, industrial demand soft — detailed analysis & guidance

Snapshot table (Q2 FY26 vs Q1 FY26 vs Q2 FY25)

Source: Company Q2 FY26 Investor Presentation; Q1 FY26 press release; Q2 FY25 press release.

Gujarat Gas Limited (GGL), India’s largest city gas distribution (CGD) company, reported a steady but mixed second quarter for FY 2025–26 (quarter ended 30 September 2025). Revenue from operations came in at ₹3,979 crore, up marginally year-on-year from ₹3,949 crore, but lower sequentially versus ₹4,065 crore in Q1 FY26. Operating profitability also moderated with EBITDA at ₹520 crore and PAT at ₹281 crore, reflecting pressure from a softer industrial demand environment and normalizing spreads after a relatively stronger first quarter. On balance, the quarter says two things: CNG is doing the heavy lifting as infrastructure expands, while industrial PNG is still adjusting to a volatile alternate-fuel landscape.

From a volume lens, GGL’s total of 8.65 mmscmd was down QoQ (8.88 mmscmd) and slightly down YoY (8.75 mmscmd). The composition, however, tells the real story. CNG clocked 3.32 mmscmd, effectively flat QoQ and up a healthy 13% YoY, underscoring resilience in the mobility segment where CNG continues to be a compelling cost-efficient fuel for personal and commercial transport. The company’s ongoing station additions and a faster FDODO (franchisee dealer-owned, dealer-operated) rollout are key supports here; GGL has already commissioned its first FDODO station in Jamnagar and executed ~74 FDODO agreements, a visible pipeline that can sustain CNG growth without overburdening the balance sheet.

The offset to that strength was industrial PNG. Industrial volumes softened to 4.35 mmscmd from 4.71 mmscmd in Q1 FY26 and 4.91 mmscmd in Q2 FY25. This is consistent with the pattern visible through FY25 and into H1 FY26: whenever alternate fuels like propane/LPG or liquid fuels trade at a relative discount to natural gas on an energy-equivalent basis, some industrial customers—especially ceramic clusters—rebalance their consumption. While this substitution is a well-known challenge in India’s CGD sector, the positive angle is that GGL’s volumes have shown a tendency to claw back as relative pricing normalizes and as the company negotiates contract structures that preserve baseline offtake. The quarter therefore reads less like a structural decline and more like another cycle in fuel economics that management has navigated before.

Sequentially, the EBITDA dip to ₹520 crore (from ₹579 crore in Q1 FY26) maps to that weaker industrial offtake and slightly narrower per-unit spreads. Year-on-year, EBITDA of ₹520 crore is lower than ₹553 crore in Q2 FY25; PAT of ₹281 crore is below ₹307 crore. In contrast, Q1 FY26 had benefitted from “best-case” variables: a high CNG volume of 3.33 mmscmd (record for the company), favorable gas sourcing mix, and disciplined opex—hence the high base. Even with Q2’s moderation, H1 FY26 aggregates still look stable: revenue ₹8,044 crore, EBITDA ₹1,100 crore, PBT ₹608 crore, and PAT ₹818 crore, indicating the franchise is absorbing volatility without undue stress.

One encouraging marker is the domestic PNG category, which nudged up to 0.83 mmscmd in Q2 FY26 from 0.69 mmscmd in Q1 FY26 and 0.76 mmscmd last year. While domestic is a smaller slice of the pie, it is sticky, helps brand presence in new GAs, and underpins base utilisation of pipelines. Commercial PNG also edged to 0.16 mmscmd, indicating steady urban reopening demand in horeca and small businesses. Pull these strands together and you have a portfolio where mobility and retail customers are offsetting part of the industrial cyclicality—exactly what a diversified CGD book is supposed to do.

What management is signalling (guidance & direction)

While the company does not publish numeric guidance, its latest materials and commentary highlight clear priorities: accelerate CNG infrastructure via the FDODO model, deepen penetration in newer GAs, and keep a AAA / A1+ credit profile to maintain a low cost of capital for network expansion. The FDODO approach, now past its proof-point, should help GGL deploy stations faster with lighter capex intensity per site—useful in a market where CNG demand is trending up and EV penetration is still in early innings across commercial fleets. In parallel, management continues to work on gas sourcing optimisation so that landed cost stays competitive versus LPG/propane; whenever the spot market turns favourable, GGL has historically leveraged it to widen spreads without ceding volumes. gujaratgas.com

Investors should also note the corporate housekeeping: shareholders approved the Composite Scheme of Amalgamation and Arrangement in October 2025, and the company has filed the requisite reports and petitions with the Ministry of Corporate Affairs. While this is more of a medium-term hygiene item than an immediate P&L lever, simplifying structure and consolidating assets typically improves agility in capex allocation and regulatory engagement—both important in CGD.

How Q2 FY26 stacks up versus prior periods

• Versus Q1 FY26: Lower revenue and earnings driven primarily by softer industrial PNG offtake and slight spread compression; CNG largely held its ground thanks to network additions and demand. The high Q1 base (record CNG volumes and strong mix) amplified the sequential decline.

• Versus Q2 FY25: Revenue is marginally higher, but EBITDA/PAT are lower due to a weaker industrial contribution and possibly less favourable sourcing/realizations versus last year’s quarter. CNG, however, is up materially YoY from 2.93 to 3.32 mmscmd, validating the capex strategy and customer adoption.

Segment takeaways

• CNG: The growth engine. Volume rose ~13% YoY; station pipeline is robust under FDODO. Expect continued volume uptick as more stations switch on and as fleet operators seek fuel cost certainty.

• Industrial PNG: Cyclical softness persists. Watch relative economics versus LPG/propane and any recovery in ceramic/textile clusters—historic experience suggests volumes recover when price parity shifts back in gas’s favour.

• Domestic & Commercial PNG: Small but improving. These categories add resilience and help smooth cash flows while network density builds out.

Risks to monitor

1. Commodity spreads: If alternate fuels stay cheaper for long, industrial recovery could lag.

2. Policy and taxes: Changes in gas allocation or duties can tilt landed cost.

3. Execution: FDODO scale-up requires partner quality and operational discipline to maintain service SLAs across geographies. (These are sectoral risks; included here to give a rounded view.)

What the first half (H1 FY26) tells us

Even with Q2 softness, H1 FY26 is broadly stable: ₹8,044 crore revenue, ₹1,100 crore EBITDA, ₹818 crore PAT. CNG averaged 3.33 mmscmd in H1, up from 2.96 mmscmd in H1 FY25, directly reflecting the build-out of stations and rising vehicle base. That vehicle base and increased route coverage underpin a multi-year demand tailwind as long as CNG retains a structural price advantage over petrol/diesel.

Bottom line for readers

Gujarat Gas’s Q2 FY26 was a steady, CNG-led quarter buffered by soft industrial PNG. Revenue is stable YoY; profitability compressed versus both Q1 FY26 and Q2 FY25 due to mix and spreads, not because of franchise slippage. The company’s AAA/A1+ credit ratings, FDODO-accelerated CNG expansion, and shareholder-approved scheme of arrangement position it well heading into H2 FY26. For the next few quarters, watch three simple markers: (i) industrial PNG’s recovery relative to LPG/propane benchmarks, (ii) monthly CNG station additions and throughput per station, and (iii) any changes in the sourcing mix that could widen per-unit margins. If two of these three turn favourable, the earnings cadence should improve accordingly.

Sources

• Investor Presentation – Q2 FY 2025-26 (Nov 2025): quarterly revenue/EBITDA/PAT, segment volumes, FDODO rollout, H1 aggregates, credit ratings, scheme status. gujaratgas.com

• Press Release – Q1 FY 2025-26 (Aug 5, 2025): revenue ₹4,065 cr, EBITDA ₹579 cr, PAT ₹327 cr, record CNG 3.33 mmscmd. gujaratgas.com

• Press Release – Q2 FY 2024-25 (Nov 2024): revenue ₹3,949 cr, EBITDA ₹553 cr, PAT ₹307 cr; CNG 2.93 mmscmd. gujaratgas.com