BofA Securities has upgraded Gujarat Gas to ‘buy’ from ‘neutral’, raising the target price to Rs 730 from Rs 550.
Gujarat Gas has raised prices of both compressed natural gas (CNG) and piped natural gas (PNG) and the spot sourcing is likely to aid margins. The firm believes that the volumes are going to go up, so there is going to be a volume uptick as well, and the valuations are attractive. Largely on back of these reasons, the brokerage house has upgraded the stock.
BofA Securities believes that further price hikes are needed but they are confident that the company is likely to defend its margin. So it is likely that the prices are going to go up further.
Also, capex is going to be strong for Gujarat Gas as the company has Rs 800 crore capex lined up for FY22.
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