The shares of various Indian gas companies across different verticals have been clocking their 52-week highs or near 52-week highs recently. This is alongside the two recent developments in the gas sector: a sharp drop in liquefied natural gas (LNG) prices and an increase in LPG cylinder prices.
Spot LNG prices have come down by $14-15 per metric million British thermal units (mmBTu) to an average of $30 per mmBtu in the recent quarter from more than $45 per mmBtu in Q2FY23.
This shall benefit city gas distribution stocks as their margins have reduced. It will aid CGDs to clock steady volume growth and regain their pricing power due to the decline in APM gas price and spot LNG price.
This coincides with the recent rally in gas stocks with many of them hitting their 52-week highs. Domestic brokerages maintain a positive outlook on the industry amidst these developments.
Gujarat State Petronet Ltd. (GSPL)
Analysts at the domestic brokerage firm ICICI Securities have provided a target price of Rs 390 per share on the stock of GSPL. This translates into an impressive 35% upside from the present trading price of Rs 288.
The stock had hit its 52-week high of Rs 298.40 during the early hours of the trading session in the morning.
Gujarat Gas Ltd.
The domestic brokerage firm Sharekhan is bullish on the stock of Gujarat Gas Ltd. with a target price of Rs 620 per share. This translates into an attractive 22.5% upside for the investors from its present trading price of Rs 506 a piece.
It has cited spot LNG price decline as a key trigger for volume growth.
Indraprastha Gas Ltd. (IGL)
The shares of Indraprastha Gas Ltd. (IGL) have generated an impressive 20% return for investors in the last year.
The analysts at ICICI Securities have given a ‘buy’ rating on the stock with a target price of Rs 535 per share. This represents a 20% potential upside for the investors.
Mahanagar Gas Ltd.
The shares of gas distributors have also rallied by 29.5% in the last 12 months to touch their 52-week high of Rs 995.50 on Wednesday, March 8.
The analysts at the brokerage firm ICICI Securities expect that recent investments and strong execution shall help the company to increase its volumes. They have given a ‘buy’ call on the stock with a target price of Rs 1,125, signalling a 13% upside from the present levels.
GAIL (India) Ltd.
The shares of GAIL have surged more than 18% in the last month only to touch their near 52-week high of Rs 112.80 during the first half of the trading session on Wednesday. The stock had reached its 52-week high of Rs 115.67 per share in August last year.
It was trading for Rs 110.95 a piece as of 14:20 IST.
Petronet LNG Ltd.
Petronet LNG stock gained 2.38% to Rs 229.85 during the first half of the trading session on Wednesday to come close to its 52-week high of Rs 232 per share. This gives the company a market capitalization of Rs 34,500 crore.
Written by Anoushka Roy
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