Morgan Stanley maintained its ‘Overweight’ rating on Gujarat Gas, with a target price of Rs 614, despite the company missing estimates on volume growth and margins. The brokerage noted that the company continues to face headwinds from high export freight costs, which have impacted demand, particularly in the tile manufacturing sector.
Sales to tile manufacturers declined 1% YoY, while overall volumes grew just 3%, supported primarily by a 12% increase in vehicle sales, in line with key peers. Margins, as expected, were under pressure, with realizations at Rs 4.37/scm, and are anticipated to decline further in the March quarter. Despite these challenges, lower LNG prices and ongoing restructuring efforts support Morgan Stanley’s positive one-year outlook for the company.
