Gujarat Gas shares climb over 6% even after Q4 profit falls 16%. Should you buy it?

Shares of Gujarat Gas rallied 6.5% to Rs 593 in Thursday's trade on BSE even after the firm reported a fall in net profit by 16% year-on-year (YoY) to Rs 369 crore, compared to Rs 444 crore in the corresponding period last year.

Meanwhile, its revenue from operations for the January-March quarter came in at Rs 4,073.82 crore, registering a decline of 14%, compared to Rs 4,773.37 crore in the year-ago period.

The company's board has declared a dividend of Rs 6.65 per equity share of Rs 2 each to the shareholders for fiscal 2022-23.

At 11.38 am, the scrip was trading 5.8% higher at Rs 490 over its last day's closing price of Rs 463 apiece. However, the stock has declined by over 8% in the last one year.

Should you buy, sell or hold Gujarat Gas stock? Here's what analysts say:

JM Financial
JM Financial reiterated its buy rating on Gujarat Gas with a target price of Rs 600.

"Though there could be near-term volatility in earnings depending on spot LNG vs propane price competitiveness, we reiterate BUY as we expect volume growth momentum to sustain in the medium to long term led by rise in gas use in the industrial segment (driven by economics, and also due to regulatory push) and due to limited threat from electric vehicles," it said.

ICICI Securities
ICICI Securities maintained its buy rating on Gujarat Gas with a target price of Rs 585.

“Gujarat Gas has reported 20% YoY dip in recurring EBITDA and 19% YoY dip in net earnings to Rs 5.6bn/Rs3.7bn, respectively, with quarter-on-quarter (QoQ) performance being largely flat. However, earnings were strongly above our estimates, with sharply improved costs in Q4FY23 driving a material beat vs our EBITDA/PAT estimates of Rs 3bn/Rs1.7bn, respectively,” it said.

“With the recent Gujarat government order implying a near doubling of dividend payout and a strong probability of a buyback as well, prospects of good returns from GGL stock appear stronger,” it added.

Motilal Oswal
Motilal Oswal reiterated its buy rating on Gujarat Gas with a target price of Rs 610.

“Gujarat Gas total volumes at 8.9mmscmd were broadly in line with our estimate. EBITDA margin at Rs 7/scm beat our estimate of Rs 6/scm. Its long-term volume growth prospects remain robust, with the addition of new industrial units, and expansion of existing units,” it said.

YES Securities
YES Securities has an add rating on Gujarat Gas with a target price of Rs 565.

"Gujarat Gas reported Ebitda at Rs 5.6bn, stood above our and street estimates. The beat on our estimates stemmed primarily from higher than estimated gas sales and lower than estimated gas costs," it said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)