India Ratings has affirmed Gujarat Gas Limited’s (GGL) bank loan facilities rating at ‘IND AAA/Stable’. The rating reflects GGL’s strong operational and financial risk profile, supported by healthy EBITDA generation and a net cash position. It also considers the expected revenue from gas trading post the amalgamation of Gujarat State Petroleum Corporation (GSPC) with GGL, expected by end-FY26. GGL’s ability to fund planned capex and maintain strong credit metrics are key factors.
Rating Rationale
India Ratings and Research (Ind-Ra) has affirmed Gujarat Gas Limited’s (GGL) bank loan facilities rating at ‘IND AAA/Stable’. The ratings reflect GGL’s continued strong operational and financial risk profile, supported by its healthy EBITDA generation in the CGD business, its net cash position, and the anticipated revenue from the gas trading business following the amalgamation of GSPC with GGL.
Analytical Approach
Ind-Ra has revised its rating approach, now factoring in the consolidated business and financial profile of GGL’s parent, Gujarat State Petroleum Corporation Limited (GSPC), which is expected to be amalgamated into GGL by end-FY26. The agency is considering the proposed scheme of arrangement, under which GSPC, Gujarat State Petronet Limited (GSPL), and GSPC Energy Limited (GEL) will be amalgamated into GGL.
Key Rating Drivers
Key strengths supporting the rating include a resilient business model post-amalgamation, focus on increasing CNG volumes, and continued strong credit metrics. A weakness is gas sourcing becoming a key determinant of success.
Financial Performance and Outlook
GGL’s business model remains strong. In 1HFY26, the total volume was 8.8mmscmd. CNG volumes increased by 12.4% year-over-year in 1HFY26 to 3.33mmscmd. GGL expects to add 20 new CNG stations under the FDODO scheme during FY26. Ind-Ra expects GGL’s credit metrics to remain strong, with cash flow generation of INR20 billion-23 billion. GGL had cash and cash equivalents of INR20 billion in 1HFY26.
Rating Sensitivities
A substantial fall in the operating margin or lower-than-expected volumes on a sustained basis could negatively impact the ratings. Adverse regulatory developments could also lead to a negative rating action.
Details of Instruments
Bank loan facilities are rated IND AAA/Stable/IND A1+ with an issue size of INR47,000 million.
Source: BSE