Emkay Sees Value In Gujarat Gas-GSPL Merger, Keeps Rs 480 Target on Track Amid Q4 Divergence

Emkay Global Financial Services has maintained its share price targets of Rs 480 for Gujarat Gas Ltd (GGL) and Rs 369 for Gujarat State Petronet Ltd (GSPL), even as the two companies posted sharply contrasting results for Q4FY25.

The brokerage continues to value the companies as a merged entity and retains a ‘Reduce’ rating on GGL and an ‘Add’ on GSPL.

GGL Outperforms on Margins, Maintains Strong Outlook
GGL reported standalone EBITDA and PAT of $4.5 billion and $2.9 billion for Q4FY25, beating Emkay’s estimates by 11% and 18%, respectively. The EBITDA per scm stood at ₹5.4, led by efficient gas sourcing and potential group-level synergies. Gross margin rose 22% QoQ to ₹10.1/scm.

“GGL beat estimates led by better-than-expected margins,” Emkay noted. “Effective gas sourcing and group synergies played a key role.”

Total volumes stood at 9.3 mmscmd, down 4% YoY and 2% QoQ, with weak demand from Morbi, where propane is currently 8% cheaper than industrial PNG (IPNG). CNG volumes grew 11% YoY and 3% QoQ, while DPNG volumes rose 5% YoY and 20% QoQ.
 

For FY25, GGL posted flat EBITDA and RPAT at $18.8 billion and $11.5 billion, respectively. Capex stood at $7.4 billion, and the company declared a dividend of ₹5.8 per share. Despite no IPNG volume guidance, the management remains optimistic about CNG growth (~12%) and favourable GSPC contract renewals.

GSPL Misses Estimates Amid Volume Pressure
In contrast, GSPL underperformed with Q4FY25 revenue of $2.38 billion, down 9% QoQ and 53% YoY, missing Emkay’s estimate by 7%. EBITDA fell 35% QoQ to $1.25 billion and PAT dropped 48% to $707 million, 24% below expectations.

Volumes declined 11% QoQ to 25.8 mmscmd, an 8% miss. Tariffs fell 3% QoQ to Rs 847/mscm, while EBITDA per mscm came in at Rs 538, down 25% QoQ. Emkay highlighted that refinery-petchem, fertiliser, and other industrial segments saw weaker gas offtake.
 

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“GSPL saw volume declining by 11% QoQ to 25.8 mmscmd, at an 8% miss. Book tariff was Rs 847/mscm, down 3% QoQ and missing our estimate by 6%,” the brokerage said.
FY25 revenue, EBITDA, and PAT fell 45%, 46%, and 37% YoY, respectively. Capex came in at $2.2 billion, down from $4.2 billion in FY24. GSPL expects FY26 volumes to remain flat YoY at ~30 mmscmd and plans to ramp up capex to $7.5–8.0 billion. The tariff petition remains pending in the Delhi High Court.

Merger Outlook and Investment View
With the merger process filed with the Ministry of Corporate Affairs, the consolidation is now expected to be completed by October 2025. Emkay believes the combined entity offers long-term structural benefits but maintains a cautious near-term outlook based on volume trends and regulatory overhang.

“Our view and estimates remain largely unchanged,” the report concludes. Emkay’s sum-of-the-parts valuation supports a target price of Rs 480 for GGL and Rs 369 for GSPL, based on the merged business structure.

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