Gujarat Gas share price crashes 7% despite gains in Indian stock market. What's behind the selloff?

Gujarat Gas shares slumped as much as 6.96% in Thursday's trading session, March 5, after the company said that the war in the Middle East is impacting the availability of R-LNG, forcing it to issue Force Majeure Notices to industrial customers.

Following this announcement, Gujarat Gas share price hit the day's low of ₹389.45 as against the previous close of ₹418.60. Despite today's losses, the energy stock remains 2.50% higher for March.

Why is Gujarat Gas share price falling?

The ongoing air conflict involving the United States and Israel against Iran has disrupted fuel shipments across the Middle East, impacting India’s major liquefied natural gas (LNG) supplier, Qatar.

According to a Bloomberg report, Qatar, on Monday, halted operations at its flagship Ras Laffan plant, which accounts for about a fifth of the world’s liquefied natural gas supplies, after an Iranian drone strike. With nearly half of its LNG imports last year coming from the Gulf nation, India is particularly exposed to disruptions.

In response to the resulting supply disruption, Gujarat Gas announced in a stock exchange filing that it has invoked a force majeure clause and will restrict natural gas supplies to its industrial customers starting Friday.

"In light of the recent ongoing war in the Middle East region impacting the gas supply scenario, the availability of R-LNG has become severely constrained. In light of the above situation, the Company has issued Force Majeure Notices to its Industrial Customers in terms of the provisions of the Gas Supply Agreements restricting the Daily Contracted Quantity effective from 6th March, 2026," the company said.

Force Majeure is a contractual clause that protects parties when unexpected and uncontrollable events, such as a war, strike, riot, crime, epidemic, or "act of God" prevent them from fulfilling their obligations under an agreement.

The company also said that war-related events are not covered under its insurance policy. This means if they suffer losses due to the war, insurance will not compensate them.

Right now, they cannot estimate the financial impact because the situation is still developing. “The company is closely monitoring the developments and will keep the stock exchanges informed of any material updates in this regard,” said the firm.

Gujarat Gas caters to customers in six states in India with around 4,430 industrial customers, more than 15,600 commercial customers and 2.27 million household clients, according to a January investor presentation, the Bloomberg report added.

The conflict showed no sign of abating on Wednesday, with Tehran again targeting Israel and Gulf states, and Israeli and US forces bombing more targets in the country.

Tehran also dismissed a report that its Ministry of Intelligence had reached out to the US to negotiate an end to the conflict as “pure falsehood.”

More than 1,000 people have died in Iran so far, and dozens elsewhere in the region.

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