Gas sector expected to report EBITDA growth of 8% in December quarter: Report

The earnings season for the NIFTY50 companies will begin from Monday, January 12. Companies in gas sector are expected to post annual operating profit growth also known as EBITDA growth (Earnings Before Interest, Taxes, Depreciation, and Amortization) of 7.8% in December quarter driven by lower gas costs, price hikes and low base, Systematix Institutional Equities said in a report.

The report said that the Brent crude during the quarter averaged around $63.1 per barrel in December quarter and which declined nearly 15% annually and is likely to hurt oil marketing companies with higher inventory losses.

Reliance Industries, the country's most valuable company, is likely to benefit from strong oil to chemicals and digital business' EBITDA which is likely to grow at 11% and 15% respectively. On the flipside, retail segment's EBITDA is likely to slow down to 2%.

Lower prices and volume are likely to dent upstream companies EBITDA by 13% in December quarter and flat volume and margin are likely to keep EBITDA growth muted for GAIL, Systematix Institutional Equities added.

For the city gas distribution companies (CGDs) EBITDA is likely to go up by 25% while net profit will grow at 19%. Both Mahanagar Gas and Indraprastha Gas are expected to report volume growth 13% and 5% respectively while Gujarat Gas volume is expected to decline 10.3% on the back of lower offtake from Morbi.

For Petronet LNG, Systematix said that the EBITDA is likely to fall by 7% because of lower volumes.

All the CGD companies tracked by Systematix Institutional Equities are likely to report sturdy performance in December quarter. It expects Mahanagar Gas to report 13% annual rise to 4.65 mmscmd. Indraprastha Gas' volume is likely rise 5% annually while Gujarat Gas' volume is expected to decline 10.3% to 8.5 mmscmd.

Gas utilities companies GAIL India and Petronet LNG are expected to witness a modest growth in December quarter. EBITDA for GAIL India is likely to rise by 1.6% and Petronet LNG's EBITDA is likely to go up by 2.4%.