Gas Stock Jumps 6% After Nomura Initiates Buy Rating with 29% Upside; Check the Stock

Synopsis: The share of this company surged 6.5 percent after Nomura and Jefferies turned bullish, citing strong Morbi volumes, improving margins, and merger-related benefits.

The share of the company, which is in the business of natural gas, involves the distribution of gas from sources of supply to centres of demand and to end customers, gained investor traction after brokerages turned bullish on the future outlook.

With a market capitalization of Rs 28,042 crore, Gujarat Gas Ltd’s shares on Tuesday made a day high of Rs 423.90 per share, up by 6.5 percent from its previous close price of Rs 397.90 per share. The share of the company has given a negative return of 12 percent over the last year.

Brokerage’s View

Nomura has assigned a Buy rating on Gujarat Gas with a target price of Rs 511, implying a potential upside of 28.9 percent, driven by strong CGD growth prospects, stable gas trading operations, and merger-related value unlocking.

Nomura remains positive on Gujarat Gas, citing a strong outlook for its City Gas Distribution (CGD) business and stable performance from its gas trading operations. The brokerage believes the company is well-positioned to benefit from improving demand trends and operational stability across key business segments.

The brokerage also highlighted the potential for significant value unlocking from the proposed amalgamation, which could enhance operational efficiency and strengthen Gujarat Gas’ long-term growth prospects. Nomura expects the integration benefits to support profitability and create additional value for shareholders over time.

According to Nomura, higher gas consumption from the Morbi industrial cluster is likely to be a key earnings driver in the near term. Management has guided for a CGD EBITDA margin of Rs 5.5–6.5 per scm, while the brokerage has factored in EBITDA margins of Rs 3.2 per scm for FY27 and Rs 5.4 per scm for FY28.

Jefferies upgraded Gujarat Gas to Hold with a target price of Rs 415, citing better-than-expected volume growth and margins. The brokerage expects stronger earnings ahead, supported by market share gains in Morbi, robust CGD demand, and the inclusion of the gas trading business in its estimates.

Gujarat Gas delivered a stronger-than-expected performance, with both gas volumes and margins surpassing estimates. The company benefited from the non-availability of propane in Morbi, which led several industrial customers to switch to natural gas, helping Gujarat Gas gain market share and improve profitability.

Jefferies noted that the supply disruption in propane has created a favorable environment for Gujarat Gas’ City Gas Distribution (CGD) business. Higher gas offtake from Morbi’s ceramic cluster has supported volume growth and margin expansion, contributing to a better earnings outlook for the company.

Following the amalgamation, Jefferies has also incorporated the gas trading business into its financial model. Reflecting the strong demand trends in Morbi and improved operating performance, the brokerage has increased its FY27E CGD EBITDA estimate by 45 percent, indicating confidence in sustained earnings growth.

About the Company

Gujarat Gas Limited (GGL) is a government company engaged in the business of Natural gas in India. The business of natural gas involves distribution of gas from sources of supply to centres of demand and to end customers. GGL caters to its customers by providing CNG and PNG connections in domestic, Industrial, Commercial and non-commercial segments in the areas of South & Central Gujarat and Saurashtra.

Financial Highlights: The revenue from operations grew by 41 percent to Rs 5,792 crore in Q4 FY26 from Rs 4,102 crore in Q4 FY25, and EBIDT grew by 35 percent to Rs 609 crore in Q4 FY26 from Rs 450 crore in Q4 FY25. This was accompanied by a net profit decrease of 27 percent to Rs 152 crore in Q4 FY26 from Rs 288 crore in Q4 FY25, resulting in an EPS decrease of 47 percent to Rs 2.21 per share in Q4 FY26 from Rs 4.18 per share in Q4 FY25.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Gas Stock Jumps 6% After Nomura Initiates Buy Rating with 29% Upside; Check the Stock appeared first on Trade Brains.