Antique Stock Broking has maintained its “buy” rating on Gujarat Gas Ltd (GGL) and raised the target price to ₹726 from ₹690 earlier, citing the company’s merger with Gujarat State Petronet Limited (GSPL) and Gujarat State Petroleum Corporation (GSPC) as value accretive from day one.
Key reasons cited by Antique for their bullish stance:
1. The merger will allow GGL to quickly utilize the ₹7,200 crore in carry-forward losses lying with GSPC.
2. The ₹2/scm trading margin charged by GSPC to GGL will now be valued at a higher multiple due to the integration of the gas trading business.
3. The intrinsic value of GSPC and GSPL’s businesses is estimated to be higher than their current market valuations.
While some synergy benefits are expected from cost savings and reduced indirect taxes, these are anticipated to be minimal.
Antique believes the merger simplifies the holding structure and unlocks value for shareholders. The brokerage has raised its price target by over 5% to ₹726, implying an upside potential of around 20% from current levels.