# 1. Financial Performance ## A. Key Figures * **Revenue from Operations:** **₹3,979 Cr** (Q2 FY26) (+0.8% YoY) · **₹3,949 Cr** (Q2 FY25) * **EBITDA:** **₹520 Cr** (Q2 FY26) (-6.0% YoY) · **₹553 Cr** (Q2 FY25) * EBITDA Margin per SCM: 6.54 (Q2 FY26) (-37% YoY) · 6.86 (Q2 FY25) * **PAT:** **₹281 Cr** (Q2 FY26) (-8.5% YoY) · **₹307 Cr** (Q2 FY25) * **CAPEX:** **₹282 Cr** (H1 FY26) ## B. Revenue Growth * **Stable Top-Line Performance:** Revenue maintained near-flat growth year-on-year, reflecting resilience amid margin pressures. ## C. EBITDA & Margins * **Sharp Margin Compression:** EBITDA margin per SCM declined significantly, indicating structural headwinds despite stable revenue. * **Full-Year Outlook:** Management projects EBITDA margin per SCM to stabilize in the **5 to 5 range** for FY2025–2026, signaling prolonged pressure. ## D. Cash Flow & CAPEX * **Sustained Investment Pace:** CAPEX in H1 reflects continued capital commitment, aligned with long-term capacity or capability buildout. --- # 2. Volume & Segment Trends ## A. Key Figures * Industrial Segment Volume: **4.34 MMSCMD** (Q2 FY'26) (–8%) · **4.71 MMSCMD** (Q1 FY'26) * Morbi Volume: **2.13 MMSCMD** (Q2 FY'26) · **2.51 MMSCMD** (Q1 FY'26) * Non-Morbi Industrial Volume: **2.22 MMSCMD** (Q2 FY'26) (+1% QoQ, +8% YoY) · **2.20 MMSCMD** (Q1 FY'26) · **2.05 MMSCMD** (Q2 FY'25) * **CNG Sales Growth:** **13% YoY** (Q2 FY'26) (+11% Gujarat, +26% non-Gujarat) * CNG Sales Volume: **3.934 MMSCMD** (record high) * **Domestic PNG Connections Added:** **42,400** (Q2 FY'26) * CNG Vehicle Base: 16.22 lakh (Sep 2025) (+15% YoY) · 14.12 lakh (Sep 2024) ## B. Industrial Volumes * **Sharp Morbi Decline:** Industrial volumes dropped significantly due to **festival-related shutdowns in Morbi**, with Q2 run rate at **7–8 MMSCMD**, well below prior levels. * **Non-Morbi Resilience:** Excluding Morbi, industrial volumes showed **sequential and year-on-year growth**, indicating underlying strength in core operations. * **Near-Term Outlook:** Morbi performance expected to remain subdued, with only **marginal recovery anticipated in H2**, limiting near-term volume rebound potential. ## C. CNG Sales Growth * **Record Demand Momentum:** CNG sales hit a new high, driven by **strong double-digit growth outside Gujarat** and favorable economics versus petrol and diesel. * **Supply Constraints:** Despite robust demand, company faced a **64% allocation shortfall in CNG segment**, resulting in **51% overall priority segment shortfall**, constraining full realization of sales potential. * **Environmental Impact:** CNG/PNG displacement of coal and petrol underscores scalable ESG contribution, supporting policy alignment and long-term adoption tailwinds. ## D. Domestic & Commercial Connections * **Market Leadership:** GGL remains India’s largest CGD player with presence across **27 geographical areas in 6 states and 1 UT**, providing diversified exposure to mature and high-growth markets. * **Sustained Connection Growth:** Added over **42,000 new domestic PNG connections** in the quarter despite monsoon headwinds, with **pipeline network spanning ~44,000 km** enabling future scalability. * **Expanding End-Market Penetration:** Commercial customer base remains robust at **15,700+ commissioned**, while **CNG vehicle base grew 15% YoY to 2.2 million**, reflecting deepening fuel switching trends. --- # 3. Supply & Sourcing Mix ## A. Key Figures * **APM Gas Sourcing:** **2.03 MMSCMD** · **NWG Allocation:** **0.44 MMSCMD** (Q2) vs. 0.54 MMSCMD (Q1) * **Contracted Volumes:** **1 MTPA** from Qatar Energy (17-year) · **4 MTPA** linked to Henry Hub Index * Gas Prices (Q1 FY'26): APM: $2.06/MMBtu · NWG: $0.54/MMBtu · Long-term avg: $3.39/MMBtu · Short-term avg: $3.04/MMBtu ## B. APM & NWG Supply * **APM Shortfall Mitigation:** Supply gap managed through diversified sources including **spot and long-term contracts**, with **short-term volumes dominating at 85 MMSCMD**. * **NWG Volume Decline:** Confirmed reduction of **10 MMSCMD** in NWG allocation QoQ, increasing reliance on alternative, higher-cost sources. * **Regulatory Tailwinds:** D.K. Saraf committee report supports **higher APM gas allocation for CNG/PNG**, aligning with CGD industry advocacy. ## C. Long- and Short-Term Contracts * **Strategic LNG Offtakes:** Secured long-term energy security via **17-year, 1 MTPA deal with Qatar Energy**, complementing existing **4 MTPA Henry Hub-linked contract**. * **Pricing Advantage:** Short-term contract prices averaged significantly below NWG at **$4/MMBtu**, offering cost relief amid volatile supply mix. ## D. LNG & Propane Sourcing * **Global LNG Shifts:** Rising U.S. exports (**145+ cargoes in Oct 2025**) and new Qatari supply from **Q4 2026** to enhance market liquidity. * **Russia Supply Risk:** European ban on Russian energy by 2027 creates uncertainty for **Yamal LNG volumes**, potentially redirecting flows to Asia or idle capacity. --- # 4. Infrastructure & Expansion ## A. Key Figures * Pipeline Network: **43,900+ km** (supplying **23.44 lakh households**, **4,429 industrial**, **15,780 commercial**) * **CNG Stations:** **834** (serving **~4 lakh vehicles/day**) * **Capex:** **₹282 Cr** invested H1 FY26 · **₹800 Cr** planned full-year * **New Volume Outlook:** **~0.5 MMSCMD** expected in new geographies within 12 months ## B. Pipeline Network * **Digital Transformation:** Strategic ERP expansion to integrate cross-vertical operations, enhanced by **AI-powered analytics** for decision-making and risk management. * **Operational Control:** Blueprint finalized for a **scalable, secure SCADA system** enabling centralized monitoring across all regions. * **Efficiency Push:** Automation initiatives identified beyond ERP to streamline non-core processes and improve monitoring. ## C. CNG Station Additions * **Infrastructure Growth:** Aggressive CNG network expansion continues with **four new stations commercialized this quarter**. * **Clean Fuel Adoption:** Daily vehicle coverage remains strong at **4 lakh vehicles**, supported by upgrades and new station rollouts. ## D. New Supply Areas * **Strategic Market Entry:** Secured PNG supply deal with **Bathinda Military Station** (11,300+ homes), marking high-profile institutional penetration. * **Industrial Reach Expansion:** New steel pipeline supply zones launched in **Ahmedabad Rural, DNH, and Thane**, targeting industrial demand. * **Near-Term Volume Catalyst:** **~5 MMSCMD** of incremental gas volume anticipated from Bharuch, Ankleshwar, and other emerging areas within the year. --- # 5. Propane Initiative & Strategy ## A. Key Figures * Baseline Morbi Volume: 1.7–1.8 MMSCMD (stable) * Natural Gas-Only Customers: >200 customers contributing 1.5–1.6 MMSCMD * **Propane Volume Forecast:** **≥2 MMSCMD** in Morbi, higher in non-Morbi areas * **Current Trading Volume:** **10–12 MMSCMD** (to expand via new LNG contracts) ## B. Customer Retention Focus * **Strategic Propane Entry:** Initiative launched to **regain lost customers** amid prolonged LNG supply constraints, not to shift existing natural gas users. * **Natural Gas Preference:** High-end manufacturers in Morbi **strongly prefer natural gas** due to superior heat consistency and quality control needs. * **Market Share Challenge:** Regaining volume requires **LNG pricing at ≤12% Brent linkage**, but no such deals are currently secured despite active negotiations. * **Supply Negotiation Hurdle:** Suppliers remain cautious in a bearish Brent environment, necessitating **hard-fought, long-term contract talks**. ## C. Port Partnerships * **Propane Infrastructure Buildout:** Advanced discussions ongoing with **port capacity providers at Pipavav and Kandla** for distribution setup. * **Logistics & Supply Chain:** Engaging **fleet operators for last-mile delivery** and evaluating **spot and term supply proposals from international propane suppliers**. * **ESG Progress:** Biogas injection live and **8% hydrogen blending successfully piloted**, supporting long-term decarbonization goals. ## D. Volume Projections * **Cautious Outlook on Realization:** Management views current propane volume projections as **overly optimistic**, expecting **significantly lower actual uptake**. * **Price-Insensitive Baseline Demand:** Morbi’s core **7–8 MMSCMD volume is structurally locked** to natural gas, resilient to fuel price differentials. --- # 6. Risks & Pricing Pressures ## A. Key Figures * **Propane to Gas Differential:** **₹4–6 per SCM** (Q2) * **LNG Price Linkage to Brent:** **17%–18%** * **Propane Price Linkage to Brent:** **~12%** (current), **12%–13%** (summer), **~15%** (winter) * **CNG Priority Sector Shortfall:** **64%** * **Industrial PNG Price in Morbi:** **₹44 per SCM** (ex-VAT) * Industrial Price Reduction: ₹3.25 per SCM cut effective Aug 1, 2025 * **Volume Sensitivity:** **50% of volumes** exposed to propane & gas price fluctuations ## B. Brent & Propane Volatility * **Seasonal Pressure Ahead:** Propane prices expected to rise in winter, tightening the gas price advantage and challenging market share retention due to increased Brent linkage. * **Pricing Leverage Intact:** Propane remains competitively priced below natural gas, supporting demand despite near-term volatility in Brent-linked fuel economics. * **Brent-Driven Dynamics:** LNG and propane pricing competitiveness is highly sensitive to Brent crude trends, with improvement anticipated from April 2026 amid current bearish outlook. ## C. CNG Supply Shortfall * **Supply Constraints Persist:** CNG availability in the priority sector remains severely constrained with a 64% shortfall, limiting volume monetization. * **Margin Guidance Held:** Despite strong Q1, management maintains prior margin guidance of ₹5–5.5, signaling caution on near-term upside. * **Hypothetical Volume-Price Trade-off:** A speculative proposal from Morbi for lower industrial PNG prices in exchange for volume commitment was dismissed as non-actionable without concrete volume commitments. ## D. Margin Dilution Risk * **Price Cuts Enacted:** Industrial PNG prices reduced by ₹25 per SCM in August 2025 to reflect lower spot RLNG and crude, preserving demand amid competitive pressures. * **Active Margin Management:** GGL dynamically balances margins and volumes by monitoring spot RLNG, alternative fuel costs, and regional demand shifts. * **Propane Margin Uncertainty:** Recent gross margins in propane business questioned at **₹10–11 per SCM**, though management did not confirm, indicating potential over-optimism. --- # 7. Guidance & Outlook ## A. Key Figures * **Industrial Volume Growth:** **2–3 lakh SCMD** increase expected within 18 months * **Volume Outlook:** Sub-**9%** for FY26 · **9–10%** for FY27 * **CAPEX Guidance (PNG):** **₹800–1,000 Cr** for FY27 * **LNG Price Forecast:** **$7–$8/MMBtu** expected by end-2027 ## B. FY26 Volume Growth * **Clean Energy Tailwinds:** Positioned to capture demand from infrastructure build-out, CNG fleet expansion, and strong customer adoption. * **Pivotal Market Phase:** 2026–2027 seen as transformational for global gas, driven by new supply and geopolitical shifts. * **Transaction Timeline:** Scheme of arrangement expected to close in **Q3 FY26**, with effective date by **December 2025**, subject to execution. ## C. CAPEX Forecast * **Targeted Investment:** CAPEX guidance provided for PNG segment only; outlay reflects commitment to scalable urban gas infrastructure. ## D. LNG Price Normalization * **Price Recovery View:** Management anticipates global spot prices will normalize by end-2027, supporting improved market stability and margin visibility.