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market | IST

Gujarat Gas surges after NGT orders to shut coal-operated ceramic units in Gujarat

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Shares of Gujarat Gas Ltd rallied in trade after the National Green Tribunal (NGT) Delhi bench ordered a shutdown of all-ceramic units that operate on coal gasifiers in Morbi, Gujarat.

Shares of city gas distribution company Gujarat Gas Ltd rallied in trade after the National Green Tribunal (NGT) Delhi ordered to shut all coal-operated units of ceramic companies in Morbi, Gujarat. The ceramic companies have been asked to either shift to gas or shut all units. The news was positive for Gujarat Gas as the company is the sole supplier of natural gas in the region.
Gujarat Gas shares rose as much as 7.31 percent intraday to Rs 130.30 per share on the NSE. At 12.24 PM, the stock traded at Rs 129.80 per share, up 5.02 percent from its previous close.
Currently, the ceramic units at Morbi consume around 2.5mmscmd of gas (~50% of total units operate on gas). Earlier, the number was as high as 4mmscmd, but this was reduced as companies switched to low-cost coal gasifiers.
The new ruling will make the volumes shift back to Gujarat Gas’ portfolio. Even if 50 percent of the lost volumes are routed back to Gujarat Gas, it would mean a 13 percent impact on FY20EPS of the company.
IDFC Securities says, “An addition of 0.7mmscmd of volumes will add 14% to Industrial segment and 10% to overall volumes for the year for the company.”
However, the ceramic industry has indicated that they will appeal against the order, and thus, the timeline of the execution of this order will be closely watched.