Gujarat Gas Stock in Focus After Volumes Jump 7.5x as Morbi Units Restart

Synopsis: After geopolitical disruptions squeezed Middle East gas supplies and forced hundreds of Morbi ceramic units to shut down voluntarily, Gujarat Gas Limited sourced alternative supply, coordinated with the Morbi Ceramic Association to restart operations, and has since driven gas consumption in the cluster from 0.36 mmscmd across 83 units in March 2026 to approximately 2.70 mmscmd across 290 units by April 22.

When geopolitical tensions disrupted natural gas supply chains from the Middle East, the impact landed hardest in Morbi, India’s largest ceramic manufacturing hub, located in Gujarat’s Saurashtra region. Hundreds of ceramic units dependent on piped natural gas for kiln-firing shut down voluntarily as supply dried up and costs spiked.

The question for investors tracking Gujarat Gas Limited was whether this was a temporary volume disruption or the beginning of a more structural demand erosion. The recovery numbers now emerging suggest the former and the pace of revival is faster than many observers anticipated.

With a market capitalisation of Rs. 26,399.76 crore, the shares of Gujarat Gas were trading at Rs. 383.5 per share, against a 52-week high of Rs. 508.7 and a 52-week low of Rs. 301.5 apiece. The stock carries a P/E of 22.93. 

The disruption originated from the geopolitical instability centred on West Asia, which tightened global LNG availability and elevated spot gas prices. For Morbi’s ceramic units which rely on continuous, high-temperature gas-fired kilns, any supply interruption or sharp cost increase is not merely an inconvenience; it renders production unviable within days. The cluster’s units began shutting down as the economics stopped working.

Gujarat Gas responded by sourcing natural gas from non-Middle East markets, replacing the disrupted supply. That sourcing pivot was the foundational move that made the subsequent revival possible, without alternative supply, no amount of stakeholder coordination would have restarted the kilns. The company then worked directly with the Morbi Ceramic Association and other cluster stakeholders to bring units back online in a coordinated manner, rather than waiting for individual units to independently negotiate restart terms.

The data tells a clear recovery arc. In March 2026, gas consumption in Morbi stood at just 0.36 mmscmd, serving 83 active units, a fraction of the cluster’s normal operating capacity. By April 22, 2026, consumption had climbed to approximately 2.70 mmscmd across 290 units. That is a 7.5x increase in volume and a 3.5x increase in active consumers over roughly six weeks. For a city gas distribution company, where revenue is directly tied to volumes consumed, this kind of sequential acceleration is operationally material.

The forward guidance is more ambitious. Management expects active consumers to reach 675–700 units, with total gas demand projected at 6–7 mmscmd by May 2026, approximately 2.3x the current consumption level. If that projection is met, Morbi alone would be contributing meaningfully to Gujarat Gas’s industrial volume line in Q1 FY27, at a time when the company’s revenue had been declining sequentially over the past five quarters.

The Morbi recovery matters more for Gujarat Gas than a standalone industrial cluster story might suggest. Morbi is one of the most gas-intensive manufacturing concentrations in GGL’s coverage geography. When it operates at capacity, it represents a significant baseload of industrial PNG demand.

The cluster shutdown had been dragging on reported volumes. Revenue fell from Rs. 4,210 crore to Rs. 3,710 crore over the past five quarters, in part reflecting both this disruption and broader APM gas allocation pressure. A Morbi recovery to 6–7 mmscmd would provide a volume tailwind heading into Q1 FY27 results.

On the profitability side, Q3 FY26 net profit stood at Rs. 266.84 crore, up 20.75 percent year-on-year but down 4.64 percent sequentially reflecting the same volume softness. The Morbi ramp-up, if sustained through May, could reverse that sequential pressure.

The revival also carries a labour dimension that regulators and state government stakeholders will track closely. Approximately 2 lakh workers are employed across Morbi’s ceramic cluster. A full restart to 675–700 active units restores livelihoods at scale, a factor that has likely accelerated government and association cooperation with GGL’s supply stabilisation efforts. Gujarat Gas is additionally expanding PNG usage within industrial facilities in Morbi, including canteen gas connections, which extends the distribution relationship beyond the kilns and deepens commercial ties with the cluster at the unit level.

Business Overview

Gujarat Gas Limited, a government company under Section 2(45) of the Companies Act 2013, is India’s leading City Gas Distribution (CGD) company and a part of the GSPL group. GSPL holds approximately 54 percent stake in the company. GGL distributes CNG and PNG connections across domestic, industrial, commercial, and non-commercial segments in South and Central Gujarat and Saurashtra.

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