Gujarat Gas Surge Ahead? Motilal Oswal Sets Bold ₹500 Target – What Investors MUST Know!

Author

Satyam Jha | Whalesbook News Team

Detailed Coverage:

Motilal Oswal Financial Services has released a research report on Gujarat Gas Limited, reiterating its BUY recommendation with a price target of INR 500. The report indicates that the company's volume performance for the second quarter of fiscal year 2026 (2QFY26) was in line with estimates, registering 8.7 million standard cubic meters per day (mmscmd). Both compressed natural gas (CNG) and industrial & commercial (I&C) piped natural gas (PNG) volumes met projections.

However, volumes in Morbi saw a slight sequential decline of approximately 0.4 mmscmd, settling at around 2.1 mmscmd. This decrease is attributed to customers transitioning to cheaper alternative fuels. Concurrently, the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) per standard cubic meter (scm) margin experienced a contraction of about INR 0.8 QoQ, falling to INR 5.6. This margin shrinkage is primarily due to a decrease in realization prices.

Despite these short-term margin pressures, the outlook remains positive. Gujarat Gas is currently trading at a Price-to-Earnings (P/E) ratio of 22.2 times its FY27 estimated earnings and an Enterprise Value to EBITDA (EV/EBITDA) multiple of 13 times for FY27 estimates. The brokerage values the stock at 24 times its December 2027 estimated Earnings Per Share (EPS).

Impact This report provides a clear direction for investors, suggesting a potential upside of approximately 12% from the current trading price to the target price. The reiterated BUY rating indicates confidence from analysts in the company's future prospects despite current challenges. Rating: 7/10

Difficult Terms Explained: - mmscmd: Million Standard Cubic Meters per Day, a unit used to measure the volume of gas. - EBITDA/scm: Earnings Before Interest, Taxes, Depreciation, and Amortization per Standard Cubic Meter. It's a profitability metric that shows how much profit a company makes from each unit of gas sold, before considering certain expenses. - P/E: Price-to-Earnings ratio. It's a valuation metric that compares a company's stock price to its earnings per share. A higher P/E can suggest investors expect higher growth in the future. - EV/EBITDA: Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a valuation metric used to compare companies, including debt, by looking at their total value relative to their operating earnings. - EPS: Earnings Per Share. It's the portion of a company's profit allocated to each outstanding share of common stock. - TP: Target Price. The price at which an analyst or brokerage firm expects a stock to trade in the future.