Gujarat Gas Cuts Morbi Industrial Gas Prices — Q2 Margins Likely to Suffer

has reduced piped natural gas prices for Morbi’s industrial consumers by ₹3.25–3.50 per standard cubic metre, effective August 1. This rollback follows a price hike implemented in December 2024 and is aimed at retaining competitiveness against alternative fuels in the ceramic cluster. Morbi is a critical consumption hub for Gujarat Gas, and the decision to lower prices is expected to erode unit-margin recovery achieved earlier. While competitive pricing may support industrial volumes, the immediate impact will likely be a notable margin squeeze in Q2. Industry Insight: * Margin vs Volume Trade-Off: Gujarat Gas is prioritizing volume preservation over near-term margin gains. Historically, the company has passed through gas cost fluctuations to maintain balance between pricing and profitability. * Competitive Pressures: Propane prices, which recently narrowed to within ₹1–1.50 per SCM of PNG rates, have pressured margins. The price adjustment aims to curb customer “fuel-switching” while maintaining business retention. * Outlook & Strategy: Gas utilities remain sensitive to global LNG pricing trends. For Gujarat Gas, revenue growth remains intact, but profitability hinges on managing volumes at lower per-unit revenues. Takeaway: While volume retention may improve through competitive pricing in the Morbi cluster, Gujarat Gas faces a short-term margin decline in Q2. Investor attention will turn to how the company balances pricing strategy with cost inflation and future volume growth across industrial and CNG segments. Source: NDTV Profit No Recommendations