Shares of Gujarat Gas Ltd. gained as much as 8% on Friday, April 17, following a significant rating upgrade from brokerage firm Nomura. According to reports from CNBC TV18, Nomura has upgraded the stock to 'Buy' from its earlier rating of 'Reduce'. The brokerage has assigned a price target of ₹390 per share, implying an upside of around 16% from the previous closing levels.
The upgrade is driven by improving demand visibility in the industrial segment, particularly in Gujarat's Morbi ceramic cluster. As reported by CNBC TV18, with the government prioritising LPG supply for households, industrial users have faced supply constraints, leading to issues around propane availability. This has created opportunities for Gujarat Gas as several ceramic manufacturers in Morbi, where nearly 78% of players rely on propane, are in discussions to switch to natural gas.
Mori-based producers are planning price hikes of 15-25% to pass on higher fuel costs, which could support margins for Gujarat Gas over time. According to CNBC TV18, Nomura believes this shift could significantly improve the company's growth outlook in the region, as the transition from propane to natural gas could provide more stable and predictable demand patterns.
While Nomura has cut its FY27 EBITDA estimate by 8% to factor in near-term margin pressure due to elevated spot LNG prices, it has raised FY28 EBITDA estimates by 14%, driven by expectations of higher industrial margins and improved volumes. As reported by CNBC TV18, this revision reflects the brokerage's optimistic outlook for the company's industrial segment performance in the coming fiscal year.
