CARE reaffirms ‘AA+' rating on Gujarat Gas' facilities worth Rs3,000 crore; stock climbs ~2.5%

29 Sep 2022 , 09:40 AM

Gujarat Gas Limited informed that CARE Ratings reaffirmed the ‘CARE AA+/CARE A1+’ rating on the company’s Long-term/Short-term bank facilities worth Rs3,000 crore.

The outlook has been reaffirmed as Positive.

Gujarat Gas’ bank facilities continue to benefit from GGL’s leading position in India’s city gas distribution (CGD) market, its well-established and relatively large scale of operations, established natural gas-sourcing arrangements, and somewhat diverse client segment mix.

The ratings continue to take into account the company’s ongoing increase in the size of operations, as well as improvements in its leverage and debt coverage indicators, solid cash accruals, good liquidity, and effective working capital management.

The ratings are further supported by its skilled and experienced management and the favorable prognosis for the CGD industry, which is an environmentally cleaner fuel.

GGL’s long-term rating, however, is restrained due to the vulnerability of natural gas demand to price dynamics of competing fuels and its corresponding impact on GGL’s profitability, particularly in light of current high and volatile regassified liquified natural gas (RLNG) prices, said CARE in its rating rationale.

At around 9.42 AM, Gujarat Gas was trading at Rs518.75 up by 2.47% from its previous closing of Rs506.25 on the BSE. The scrip opened at Rs515.95 and touched intraday high and low of Rs520.65 and Rs511 respectively.

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