Citi has highlighted that the end of exclusivity for city gas distribution (CGD) companies should be seen as an opportunity rather than a threat. The brokerage believes that this shift will allow established players like Indraprastha Gas (IGL) and Mahanagar Gas (MGL) to expand their geographic footprint, particularly through mergers and acquisitions (M&A) or by entering smaller players’ territories.
Citi sees low risk of competition for IGL and MGL, as they are well-established in key markets. The brokerage firm has listed MGL, IGL, and GAIL as its preferred gas picks, citing their strong market positions and growth potential.
On the other hand, Gujarat Gas is seen as carrying higher risk due to its significant exposure to the industrial segment, which is more volatile compared to city gas distribution. The firm suggests that industrial gas demand may be more susceptible to economic cycles and price fluctuations, increasing uncertainty for the company.
Citi’s outlook indicates that larger CGD players are well-positioned to leverage the evolving regulatory landscape, while companies with high industrial exposure may face more challenges.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to risks. Always conduct your own research or consult a financial advisor before making investment decisions.