Nomura has assigned a price target of ₹390 per share on the stock, implying an upside of around 16% from the previous closing levels.
The upgrade is driven by improving demand visibility in the industrial segment, particularly in Gujarat’s Morbi ceramic cluster.
With the government prioritising LPG supply for households, industrial users have faced supply constraints, leading to issues around propane availability.
As a result, several ceramic manufacturers in Morbi, where nearly 78% of players rely on propane, are in discussions with Gujarat Gas to switch to natural gas. Nomura believes this shift could significantly improve the company’s growth outlook in the region.
Additionally, Morbi-based producers are planning price hikes of 15-25% to pass on higher fuel costs, which could support margins for Gujarat Gas over time.
While the brokerage has cut its FY27 EBITDA estimate by 8% to factor in near-term margin pressure due to elevated spot LNG prices, it has raised FY28 EBITDA estimates by 14%, driven by expectations of higher industrial margins and improved volumes.
