Gujarat Energy Q2 FY27 Result: Profit Up 22% and the 10-Year ADNOC LNG Deal Draws Attention

A busy stretch for Gujarat Energy (NSE: GUJENERGY): quarterly revenue jumped 59% to ₹9,826 crore and profit after tax rose 22% on the year. The catch is that profit came in far below June's level, and margins thinned. The other half of the story is gas supply. On 6 November the company signed a 10-year LNG agreement with ADNOC for up to 4.0 million tonnes, and its board has approved further long-term deals aimed at reducing its reliance on spot cargoes.

Gujarat Energy Q2 FY27 Results: Revenue Up 59%, Profit After Tax Up 22%

Revenue from operations for the September quarter was ₹9,826 crore, against ₹6,165 crore a year ago. EBITDA, which includes other income, rose 19.5% to ₹1,019 crore. Profit after tax was ₹639 crore, where last year it was ₹525 crore, and earnings per share came to ₹6.81 against ₹5.59.

Sales grew a lot faster than profit, so margins took the hit. EBITDA margin was 10.37%, down from 13.84% a year earlier. The company's release offers no cost bridge, so the reason isn't spelled out. Gas trading revenue nearly doubled in the half year, which may be part of the explanation, but that is my inference and not something the company has said.

Set the quarter against June and the picture changes. Subtracting the September quarter from the half-year totals leaves roughly ₹9,670 crore of revenue and ₹998 crore of profit for April to June. So September sold slightly more but earned about 36% less, and EBITDA fell by roughly 31%. That is a bigger drop than the year-on-year numbers suggest.

For the half year, revenue was ₹19,496 crore (up 61.3%), EBITDA ₹2,502 crore (up 43.1%) and profit after tax ₹1,637 crore (up 50.8%). Half-year EPS was ₹17.45 against ₹11.57. The half looks strong mostly because June was strong. Prior-year figures have been restated after the group's merger, so the comparisons are on the new combined structure.

Gujarat Energy Volumes and Segments: City Gas, CNG and PNG

City gas distribution is still the operating core. The numbers for the quarter looked like this:

·        City gas distribution volumes rose about 24% to 10.7 MMSCMD in Q2 and about 31% to 11.5 MMSCMD for the half year, helped by industrial demand and CNG penetration.

·        CNG volumes were 3.67 MMSCMD, up about 11%. Thirteen new stations in the quarter took the network to 857.

·        About 49,000 new domestic PNG customers joined in Q2 and about 1.08 lakh in the half year. The company serves more than 25.3 lakh households across six states and one union territory.

·        Gas trading revenue was ₹14,746 crore for the half year against ₹7,888 crore, and city gas distribution was ₹14,500 crore against ₹8,044 crore. Both are before inter-segment eliminations, so they add up to more than total revenue.

The pipeline network reached 43,148 km of MDPE and 3,542 km of steel by 30 September. Capital spending was about ₹181 crore in Q2 and about ₹308 crore for the half year, against FY27 guidance of roughly ₹1,000 crore. That leaves around ₹692 crore for the second half, so spending is weighted towards the back end of the year.

Gujarat Energy Cash Position: ₹2,209 Crore in Cash and a Big Working-Capital Build

Cash and cash equivalents ended September at ₹2,209 crore, up from ₹978 crore in March. Operating cash flow for the half year was ₹2,452 crore, against ₹1,595 crore a year earlier on a restated basis. The largest outflow was the FY26 dividend of ₹8.90 per share, which cost about ₹835 crore.

Underneath, working capital moved a great deal. Receivables absorbed ₹1,719 crore and inventories ₹1,538 crore, with inventories at ₹2,660 crore against ₹1,122 crore in March. Trade payables rose by ₹1,990 crore and covered most of that. Healthy operating cash flow is therefore partly supported by suppliers waiting longer to be paid, which is worth watching. Current borrowings also rose, to ₹389 crore from ₹146 crore.

One older issue remains open. The company has fully provided for ₹527 crore of cash calls it is owed by Jubilant Offshore Drilling in the KG block, and says no further provision was needed in the quarter or half year. As a 10% non-defaulting partner, though, it may have to fund future defaulted cash calls. No amount or timing has been disclosed, and the liquidator's appeal at the NCLAT is still pending.

A note on the data: profit figures above are standalone, while some balance-sheet and cash-flow figures come from the half-year filing as summarised by data providers, so they may not tie line by line to the standalone numbers.

ADNOC LNG Agreement: What the 4.0 Million Tonne Deal Means for Gujarat Energy

Gujarat Energy signed a long-term sales and purchase agreement with ADNOC for up to 4.0 million tonnes of LNG over 10 years, with deliveries starting in 2028. It is the first sale from the international portfolio of XRG, ADNOC's international investment arm, and ADNOC's fifth LNG supply agreement in India.

The point that was unclear in the exchange summary can now be settled: 4.0 million tonnes is the maximum for the whole 10 years, not a yearly quantity. Spread evenly, that is at most about 0.4 million tonnes a year, a modest slice of supply for a company that imported 24 cargoes in the half year alone.

The commercial terms are not public. Price, the pricing formula, minimum purchase obligations and resale rights all remain undisclosed, which is why it is too early to put an earnings number on the deal. Managing Director Avantika Singh described the partnership as part of the company's aim to lead at every stage of the energy journey.

LNG Sourcing and Mundra Regasification: Less Dependence on Spot Cargoes

On 5 November the board approved long-term sourcing agreements with international suppliers for about 0.8 MTPA, for tenures of up to 10 years and linked to Henry Hub. Chairman M K Das said the aim is to reduce dependence on spot cargoes. The board also approved a firm regasification agreement for cargo slots at GSPC LNG's Mundra terminal. I haven't seen a filing explaining how the ADNOC contract relates to that 0.8 MTPA approval, so I've treated them as separate disclosures.

Contract mix matters for this stock. The company imported 14 cargoes in Q2 and 24 in the half year, against 12 a year earlier. Morgan Stanley downgraded the stock to underweight in August, citing exposure to costly spot LNG, competition from alternative fuels and low utilisation of downstream gas assets. Longer-term supply speaks directly to the first of those concerns.

Smaller, longer bets are also in motion. The company has invited franchise partners to build LNG stations for long-haul transport, and is seeking partners for compressed biogas plants with proposed capacity of 200 tonnes a day, split evenly between Gujarat and other states.

Gujarat Energy Share Price and Valuation Snapshot

The stock has traded between roughly ₹206 and ₹444 over the past year, so it sits close to the bottom of that range. Promoters hold about 38.9%. Mutual funds trimmed their stake from 16.38% to 13.34% in the September quarter. The dividend yield rests on the ₹8.90 payout for FY26. 

Gujarat Energy Developments to Track After the Q2 Results

·        Management's comments on the earnings call scheduled for 4 PM IST on 6 November, especially on why margins narrowed.

·        Whether quarterly profit recovers from September's ₹639 crore towards June's roughly ₹998 crore.

·        Price, minimum-purchase and resale terms of the ADNOC agreement, and how it fits alongside the 0.8 MTPA of Henry Hub-linked deals.

·        Receivables and inventory, which grew sharply, and whether the rise in trade payables unwinds.

·        The pace of capital spending against the ₹1,000 crore guidance, with about ₹308 crore spent so far.

·        The NCLAT appeal on the JODPL matter and any future cash calls under the joint operating agreement.

·        City gas volume growth and CNG and PNG additions in the December quarter.

The top line was strong and the company is locking in longer-term gas supply. What the numbers don't yet show is why profit per rupee of sales dropped so much, and the next few disclosures will decide how much attention that deserves.