Gas stocks in focus: On the back of robust earnings in the fourth quarter of the financial year 2021-22(Q4FY22), gas companies’ stocks – Gujarat Gas Limited and Mahanagar Gas Limited – surged up to 9.5 per cent on the BSE intraday during Wednesday sessions. 

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Individually, Gujarat Gas shares jumped nearly 9.5 per cent to touch a day’s high level of Rs 554.25 per share on the BSE intraday, while Mahanagar Gas shares gained almost 7 per cent to touch day’s high level of Rs 799 per share on the BSE intraday.

The cascading effect of strong Q4 results was also seen in other gas companies’ stocks. In this regard, Indraprastha Gas Limited and Oil and Natural Gas Corporation (ONGC) gained 5 and 2 per cent respectively during Wednesday’s session on the BSE intraday. 

According to global brokerage firm Jefferies, Gujarat Gas reported a higher-than-expected margin mainly driven by a sharp 39 per cent growth in EBITDA (earnings before interest, taxes, depreciation, and amortization). The brokerage raised FY23 EPS estimates by 13 per cent. 

Jefferies maintained a Buy rating on the stock with a price target of Rs 700 per share, which implies and potential growth of over 38 per cent from Tuesday’s closing price. 

Similarly, CITI also pointed out that Q4 results were a big margin beat for Gujarat Gas with volumes broadly in-line. It said the strategy of curtailing volumes helped deliver on the margin front. The brokerage also gives a Buy call with a target of Rs 630 apiece, implying over 24 per cent upside.  

For Mahanagar Gas, Jefferies said the EBITDA expectations were beaten on higher margins during the March quarter, it added sharp price hikes and headroom available in CNG economics expresses comfort in the stock. It maintained a Buy rating with a target of Rs 1400 apiece (87 per cent upside).