Motilal Oswal Financial Services (MOSL) has maintained its ‘Buy’ rating on Gujarat Gas, while cutting the target price to ₹500 from ₹555, citing pressure on industrial volumes and weaker volume estimates for the upcoming fiscal years.
Volume estimates revised lower despite margin stability
The brokerage has revised its FY26/27 volume estimates downward by 0.6/0.9 mmscmd, noting ongoing near-term pressure in industrial demand. While propane prices have softened, spot LNG prices remain elevated, impacting the cost dynamics.
Despite the volume pressure, EBITDA/scm margins held steady at ₹5.9, offering some cushion to the bottom line.
EPS outlook cut; stock trades at discount to historical average
MOSL has cut its EPS estimates by 8% for FY26 and 9% for FY27. It warned that the stock may remain under pressure due to the muted volume outlook.
Valuation-wise, Gujarat Gas is currently trading at 22.8x one-year forward P/E, which is below its long-term average (LTA) of 25.3x, offering potential value upside if demand trends stabilize.
Disclaimer: The views expressed in this article are those of the brokerage firm and do not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
