Gujarat Gas gains as UBS sees 11% upside on improved outlook [Video]

Analysts at brokerage UBS expect up to 11% upside in Gujarat Gas shares in the next 12 months following improved outlook on volumes and margin due to recent correction in LPG prices.

The brokerage also upgraded the stock to ‘neutral’ from its ‘sell’ recommendation earlier and increased the target price from ₹380 per share to ₹610 per share. The new target price suggests a potential upside of 11% from Wednesday’s close.

The brokerage in a report stated that the rating upgrade follows and improved outlook on volumes and margin as spot LNG prices have softened.

UBS raised the FY25-26E volume estimate by 9% (industrial volumes by 16%) and gross margin by 4-8%, which leads to a 19-24% higher earnings before interest tax depreciation and amortisation (EBITDA).

The brokerage mentioned that a further decline in spot LNG prices to 2019-20 levels (USD 5.0/mmbtu) poses upside risks to earnings.

The brokerage stated …