I found the following positives
- Gujarat gas now sources almost 95% of its gas requirements at market prices now and has been able to maintain the operating margins. In 2003, a substantial portion of gas was procured at subsidized rates and hence there was a risk of margin reduction. The company has been able to manage the transition very well.
- There has been a substantial reduction in the transmission income. The company has managed this well by expanding the other lines of revenue
- There is substantial expansion in progress at Vapi and Jaghadia. Vapi will contribute to revenue in 2007
- Gas volumes, no. of retail customers and bulk customers are all increasing at a heatlhy rate. This should provide good growth over the next few years
- The CNG business is now in growth phase and should provide for healthy growth of revenue and profits.
Overall the company is firing on all cylinders. It also has expansion plans in place and is investing heavily. I have updated my company analysis (valuation template-gujgasaug2007) and uploaded the same. The earlier analysis of the company from 2003-04 is also uploaded in the valueinvestorindia google groups.
Disclaimer: I am not recommending this stock. I do not hold the stock as of now and may or may not have a position in the future.