Gujarat Gas' long-term volume growth prospects remain robust, with the addition of new industrial units and expansion of existing units. It is aggressively investing in infrastructure to push industrial gas adoption in Thane rural, Ahmedabad rural, and the newly acquired areas in Rajasthan.
NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
Valuation de-rating largely over, in our opinion: Over the last six months, Gujarat Gas Ltd.'s share price has corrected 34%, with the stock now trading at 21x FY27E P/E. Weakness in the stock price was driven by-
higher spot LNG prices leading to elevated raw material costs and
subdued industrial and commercial PNG volumes amid weak ceramic exports and weak competitiveness versus other fuels like Propane.
However, we now believe fundamentals are undergoing a transformative shift:
Weaker crude and lower slope – the twin emerging tailwinds: A weak crude price outlook together with a lower pricing slope for natural gas (given the impending LNG glut) will drive down gas costs and increase competitiveness versus propane. While Brent crude prices averaged ~$75.8/bbl in Q4 FY25, we forecast Brent to average $65/bbl in FY26/FY27 (earlier: $70/bbl).
We estimate every $10/bbl decline in Brent prices reduces the landed cost of natural gas by $2.3/mmbtu. Further, according to our discussions with the listed and unlisted India CGD companies, new long-term gas contracts are already being signed for a 1.0-1.3% lower slope given the expected surge in LNG supply in H2 FY26 and beyond.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
