On September 2, 2024, Gujarat Gas stock saw a dramatic surge of 14% as it hit an intraday high of Rs 689.45 per share. This remarkable increase follows the board’s approval of a significant merger and demerger plan involving Gujarat State Petroleum Corporation (GSPC) and Gujarat State Petronet Limited (GSPL).
Merger and demerger plan sparks investor excitement
The restructuring plan approved by the Gujarat Gas Board entails amalgamating GSPC and GSPL into Gujarat Gas Limited (GGL). Under this scheme, GSPC shareholders will receive 10 GGL shares for every 305 GSPC shares, and GSPL shareholders will receive 10 GGL shares for every 13 GSPL shares. Following the merger, the gas transmission business will be demerged into a new entity, GSPL Transmission Limited (GTL). At the same time, Gujarat Gas will retain the city gas distribution (CGD) business, along with GSPC’s gas trading, exploration and production (E&P), renewables, and other investments.
For those keen on making informed decisions when looking to buy stock online, Gujarat Gas has become a notable contender, especially given the anticipated benefits from this restructuring.
Positive brokerage recommendations
Nuvama: Analysts at Nuvama are optimistic about Gujarat Gas, estimating a 39% increase in earnings per share (EPS) following the merger. They highlight that GGL can utilise GSPC’s Rs 7,200 crore in tax losses over eight years, achieving around Rs 300 crore annually in indirect tax savings. With a better pricing scenario for propane in Morbi and other advantages, Nuvama has maintained a ‘Buy’ rating on Gujarat Gas with a target price of Rs 745, reflecting a potential upside of 23%.
Motilal Oswal: Motilal Oswal has also retained a ‘Buy’ rating for Gujarat Gas, with a target price of Rs 715, suggesting an 18% upside. Despite a forecast of weak volume momentum in Q2FY25 due to high spot LNG prices and a temporary shutdown in the Morbi cluster, they anticipate a recovery in the latter half of FY25 and FY26. Analysts expect improved margins, return ratios, and cash flows post-restructuring, which is expected to be completed by August 2025.
Kotak Institutional Equities: Conversely, Kotak Institutional Equities has suspended its previous ‘Buy’ rating. Analysts estimate that the restructuring is about 5-6% more favourable for GSPL minorities compared to GGL minorities. They anticipate that until GSPL’s delisting in June 2025, its stock will align with GGL’s performance rather than reflecting its own fundamentals. Post-restructuring, GSPL will operate solely as a transmission business, while Gujarat Gas will manage CGD, profitable gas trading, E&P, renewables, and other segments.
Why buy Gujarat Gas stock online?
For those interested in buying stock online, Gujarat Gas is currently a compelling choice. The positive outlook from major brokerages and the strategic benefits of the merger and demerger plan enhance the stock’s attractiveness. With strong anticipated earnings growth, improved operational efficiency, and significant value unlocking for shareholders, Gujarat Gas offers a promising opportunity in the stock market.
As always, investors should conduct thorough research and consider their investment goals before making any decisions. The latest developments surrounding Gujarat Gas make it a noteworthy option for those looking to buy stock online and capitalise on market opportunities.
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