GUJGASLTD - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.9

📊 Financial Overview: Gujarat Gas Ltd (GUJGASLTD) maintains a strong financial base with a market cap of ₹28,124 Cr and an exceptionally low debt-to-equity ratio of 0.02, indicating conservative financial management. The company posted a PAT of ₹327 Cr this quarter, up from ₹287 Cr sequentially, although the YoY profit variation is -0.91%, suggesting flat earnings growth. Return metrics are solid, with ROCE at 19.6% and ROE at 14.3%, reflecting efficient capital deployment.

💹 Valuation Metrics: The stock trades at a P/E of 24.6, slightly above the industry average of 19.9, indicating a mild premium. With a Book Value of ₹123, the P/B ratio is ~3.32. The PEG ratio of -6.40 signals earnings contraction, which may warrant caution. Dividend yield stands at a respectable 1.42%.

🔥 Business Model & Competitive Advantage: Gujarat Gas is a leading city gas distribution company, supplying natural gas to industrial, commercial, and residential segments. Its extensive pipeline infrastructure, regulatory support, and strong industrial customer base provide a durable competitive edge. The company benefits from rising energy demand and the shift toward cleaner fuels.

📈 Technical Indicators: RSI at 38.5 suggests the stock is approaching oversold territory. MACD at -5.92 indicates bearish momentum. The stock is trading below both its 50 DMA (₹428) and 200 DMA (₹454), signaling short-term weakness. Volume is below average, hinting at subdued investor interest.

🎯 Entry Zone: A favorable entry range would be around ₹390–₹410, offering a better margin of safety and aligning with recent support levels.

🕰️ Long-Term Holding Guidance: Gujarat Gas is a fundamentally sound utility player with stable cash flows and long-term growth potential. Long-term investors can consider accumulating on dips for exposure to India’s clean energy transition.

✅ Positive

• Strong ROCE (19.6%) and ROE (14.3%) reflect efficient capital usage.
• Low debt-to-equity ratio (0.02) ensures financial resilience.
• EPS of ₹16.6 supports consistent earnings performance.
• Dividend yield of 1.42% adds income appeal.

⚠️ Limitation

• PEG ratio of -6.40 indicates earnings contraction.
• Stock trading below key moving averages suggests technical weakness.
• Volume below average may reflect short-term caution.

📉 Company Negative News

• FII and DII holdings declined slightly, signaling cautious institutional sentiment.
• MACD and RSI indicate short-term bearish momentum.

📈 Company Positive News

• Sequential PAT growth from ₹287 Cr to ₹327 Cr shows operational improvement.
• Stock has gained 25.1% from its 52-week low of ₹360.

🏭 Industry

• City gas distribution benefits from regulatory support and rising demand for cleaner energy sources.
• Industry P/E of 19.9 reflects moderate valuation across peers.

🧾 Conclusion

• Gujarat Gas is a stable utility company with strong fundamentals and long-term growth potential.
• Valuation is fair; consider accumulating near ₹390–₹410.
• Ideal for long-term investors seeking exposure to India’s clean energy infrastructure.