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Business News/ Markets / Stock Markets/  Gujarat Gas share price falls 6%; several brokerages downgrade stock after Q3 result
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Gujarat Gas share price falls 6%; several brokerages downgrade stock after Q3 result

Gujarat Gas share price is up 46 per cent from its 52-week low level and 6 per cent down from its 52-week high level.

Gujarat Gas share price hit its 52-week high of ₹620.60 on February 7 this year. The stock is 6 per cent down from its 52-week high level as of February 15 close. (Image: Pixabay) (Pixabay)Premium
Gujarat Gas share price hit its 52-week high of 620.60 on February 7 this year. The stock is 6 per cent down from its 52-week high level as of February 15 close. (Image: Pixabay) (Pixabay)

Gujarat Gas share price saw significant profit booking in morning trade on Friday, February 16, declining as much as 6 per cent on BSE. Gujarat Gas share price opened at 570.70 against the previous close of 580.85 and soon declined 6 per cent to hit the level of 546. Around 9:30 am the stock traded 4.27 per cent lower at 556.05 on the BSE.

The stock has been witnessing volatility after declaring its December quarter result on February 13. The stock fell 0.3 per cent on February 14 and jumped about 4 per cent in the next session on February 15. It is trading lower today.

Gujarat Gas share price hit its 52-week low of 397.20 on October 26 last year. As per the stock's February 15 close, the stock is up 46 per cent from its 52-week low level.

The stock hit its 52-week high of 620.60 on February 7 this year. The stock is 6 per cent down from its 52-week high level as of February 15 close.

Gujarat Gas reported a standalone net profit after tax (PAT) of 220.34 crore for Q3FY24, down almost 41 per cent against a profit of 371.26 crore in the same quarter last year. Revenue from operations for the quarter, however, rose nearly 7 per cent year-on-year to 4,084.26 crore. In the same quarter last year, the company's revenue from operations stood at 3,821.28 crore.

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Several brokerages downgrade the stock

After the company's Q3 earnings, brokerage firm Emkay Global Financial Services downgraded Gujarat Gas stock to a 'sell' from a 'reduce', pegging the target price at 440.

"We downgrade Gujarat Gas to sell from reduce, with an unchanged Dec-24E DCF-based target price of 440 primarily due to uncertain Morbi volume outlook and volatile margin profile amid expensive valuations (trading at nearly 27 times Dec-25E EPS versus peers at nearly 15 times)," said Emkay.

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Brokerage firm Nirmal Bang also downgraded the stock to an 'accumulate', with a target price of 564 on muted risk-reward as the stock has rallied more than 35 per cent in the last three months.

"Slowdown in the Morbi segment due to the Red Sea tensions impacting tile exports, slower growth in CNG, and an increase in gas prices, which could entail some trade-off between volume growth and margin," Nirmal Bang said.

"Morbi PNG volume at 3.65 MMSCMD is 45 per cent of overall energy demand in that region. The increase in GGL’s market share in Morbi could entail some price cuts as well as time and require a revival in Morbi tile exports. Also, Morbi PNG is priced at 45/scm, which is 9 per cent above alternative fuel propane. As we head into the lean season, propane prices may decline, which could force GGL to either take a hit on margins or market share in Morbi," said Nirmal Bang.

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But Motilal Oswal stays positive

However, brokerage firm Motilal Oswal Financial Services remains positive about the stock. It has maintained a buy rating on the stock with a target price of 675.

"The company’s long-term volume growth prospects remain robust, with the addition of new industrial units and the expansion of existing units. It is aggressively investing in infrastructure to push industrial gas adoption in Thane rural, Ahmedabad rural, and newly acquired areas in Rajasthan," said Motilal Oswal.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 16 Feb 2024, 10:03 AM IST
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