PSU Stock Jumps 9% Amid Industrial Demand Recovery and Strong Outlook

Synopsis:  Gujarat Gas is seeing improving prospects as multiple demand drivers begin to align, indicating a gradual shift from a challenging phase to a more stable and growth-oriented outlook. 

The shares of this small cap company majorly engaged in the business of natural gas in India providing CNG and PNG connections to domestic, industrial and many more were in focus after witnessing some recovery in industrial demand. 

With the market capitalization of Rs. 25,078 Crores, the shares of Gujarat Gas Ltd reached an intraday high of Rs. 365.95 per share raising nearly 9 percent from its previous day close of Rs. 335.50 per share and is trading at a P/E of 21.5 whereas industry P/E stands at 19.7

What is the NEWS

Gujarat Gas Ltd’s outlook is strengthening mainly due to a recovery in industrial demand, especially from the Morbi ceramic cluster, where operations are picking up again and driving higher gas consumption. At the same time, global factors such as supply uncertainties linked to the Iran situation could support overall gas demand.

On the consumer side, any rise in petrol and diesel prices makes CNG a more attractive and cost-effective option, which can increase usage. Additionally, the government’s push towards expanding piped natural gas (PNG), particularly when LPG availability is tight, is likely to support steady growth in household demand

Outlook & Earnings Impact

Factoring in these tailwinds, Nomura has raised its FY27 EBITDA estimates by 14%, driven by higher industrial volumes and slightly improved margins. With demand recovery, policy support, and favorable pricing dynamics, the company appears well-positioned for steady growth ahead.

About the Company and Financials

Gujarat Gas Limited (GGL) is a PSU company, formerly Known as GSPC Distribution Networks Limited(GDNL), GGL is 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

The company has its presence across 6 states and 1 union territory covering over 44 districts. The company’s customer base includes 23.83 lakh PNG Domestic Connections, ~15,900 plus PNG Commercial Connections and 4,454 plus PNG industrial Connections with over 833 CNG stations. 

Year on Year analysis: Revenue from operations has decreased from Rs. 4153 Crores to Rs. 3658 Crores, down 12 percent. Operating profit has increased  from Rs. 380 Crores to Rs. 447 Crores, up 17.6 percent and net profit has increased from Rs. 221 Crores to Rs. 267 Crores, up 20.8 percent 

Quarteron Quarter analysis: Revenue from operations has decreased from Rs. 3780 Crores to Rs. 3658 per share, down 3.2 percent. Operating profit remained same at Rs. 447 Crores and net profit decreased from Rs. 280 Crores to Rs. 267 Crores, down 4.6 percent 

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