Brokerage firm Motilal Oswal has initiated coverage on Gujarat Energy Ltd with a 'BUY' rating and a price target of ₹360. The positive outlook is driven by strong volume growth in city gas distribution and significant gains in the gas trading segment. Shares closed at ₹284.40 on August 13, 2026.
Brokerage firm Motilal Oswal has initiated coverage on Gujarat Energy Ltd with a 'BUY' rating and a price target of ₹360. This move reflects confidence in the company’s recent business performance following its corporate restructuring. The market responded positively to the announcement, with shares of Gujarat Energy closing at ₹284.40 on the National Stock Exchange (NSE) on August 13, 2026, marking a 3.66% gain for the day.
Growth Drivers and Performance
The brokerage report emphasizes robust operational performance in the company's city gas distribution (CGD) segment. Volume growth in this segment reached 12.3 million standard cubic meters per day (mmscmd), which represents a 39% increase compared to the previous year. Additionally, the company saw a significant surge in its gas trading segment, where earnings before interest and tax (EBIT) grew threefold year-on-year. This strong momentum in both core business areas supports the optimistic stance taken by the brokerage.
Valuation Approach
Motilal Oswal utilized a sum-of-the-parts (SoTP) valuation method to arrive at the ₹360 target price. Under this approach, the city gas distribution business is valued at ₹200 per share, based on its growth potential. The gas trading segment contributes ₹53 per share to the valuation. The brokerage also accounts for the company's net cash balance of ₹87 per share and adds ₹18 per share for investments in subsidiaries, associates, and joint ventures.
Corporate Context and Risks
Gujarat Energy Ltd, formerly known as Gujarat Gas Ltd, operates as an integrated energy company. The current corporate structure is the result of a composite scheme of arrangement completed in May 2026, which consolidated various GSPC Group entities.
While the brokerage remains optimistic, investors should keep in mind the potential risks associated with the energy sector. These include the impact of government regulatory changes on city gas distribution margins and the sensitivity of the business to fluctuations in global crude oil and natural gas prices. Furthermore, the company faces execution risks related to the ongoing integration of the various GSPC Group entities that were merged earlier this year. Any unexpected slowdown in demand or increase in operational costs could affect future earnings.
Investors may monitor the company’s upcoming quarterly results for updates on volume consistency and the progress of its integrated operations. The ability of the management to maintain healthy profit margins in the gas trading segment while scaling up city gas distribution volumes will be a key factor for the stock's future performance.