Gujarat Gas shares were in focus on Tuesday, June 2, rising more than 6% in early trade after positive commentary from global brokerages Jefferies and Nomura. The stock climbed to an intraday high of ₹423.90 and was trading around ₹422, compared with its previous close of ₹396.80.
Jefferies upgraded Gujarat Gas to Hold and assigned a target price of ₹415 per share, following a stronger-than-expected operational performance. According to the brokerage, the company delivered a beat on both volumes and margins, supported by favourable developments in its key Morbi market.
The brokerage highlighted that the non-availability of propane in Morbi has helped Gujarat Gas gain market share, resulting in higher volumes and margin expansion. Jefferies also incorporated the company’s gas trading business into its financial model following the completion of the amalgamation process.
Reflecting the improved outlook, Jefferies raised its city gas distribution (CGD) EBITDA estimates by 45% for FY27, citing robust demand from Morbi and sustained operational momentum.
Nomura, meanwhile, maintained its Buy rating on Gujarat Gas with a target price of ₹511 per share, implying significant upside from current levels.
The brokerage said the outlook for the CGD business remains strong, while the gas trading segment is expected to remain stable. It also sees meaningful value unlocking from the amalgamation and expects Morbi volumes to remain a key earnings driver in the near term.
Nomura noted that management has guided for a CGD EBITDA margin of ₹5.5–6.5 per standard cubic metre (scm). The brokerage has factored in EBITDA margins of ₹3.2/scm for FY27 and ₹5.4/scm for FY28, reflecting expectations of continued improvement in profitability.
The positive brokerage commentary comes at a time when investors are closely tracking demand trends in industrial gas consumption, particularly in Morbi, one of the country’s largest ceramic manufacturing hubs. Higher industrial volumes and benefits from the newly integrated gas trading business are expected to remain key drivers for Gujarat Gas going forward.
At the time of writing, Gujarat Gas was among the top gainers in the city gas distribution space, outperforming the broader market.
Disclaimer
The views and recommendations mentioned are those of the respective brokerages and do not represent the views of this publication. This article is for informational purposes only and should not be construed as investment advice.