GUJGASLTD - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.0
| Stock Code | GUJGASLTD | Market Cap | 28,517 Cr. | Current Price | 415 ₹ | High / Low | 509 ₹ |
| Stock P/E | 24.6 | Book Value | 126 ₹ | Dividend Yield | 1.40 % | ROCE | 19.6 % |
| ROE | 14.3 % | Face Value | 2.00 ₹ | DMA 50 | 411 ₹ | DMA 200 | 431 ₹ |
| Chg in FII Hold | 0.12 % | Chg in DII Hold | 0.09 % | PAT Qtr | 266 Cr. | PAT Prev Qtr | 281 Cr. |
| RSI | 52.3 | MACD | 1.97 | Volume | 2,37,539 | Avg Vol 1Wk | 4,19,413 |
| Low price | 360 ₹ | High price | 509 ₹ | PEG Ratio | -6.40 | Debt to equity | 0.02 |
| 52w Index | 36.9 % | Qtr Profit Var | 19.8 % | EPS | 16.9 ₹ | Industry PE | 19.0 |
📊 Analysis: Gujarat Gas (GUJGASLTD) trades at a P/E of 24.6, slightly above the industry PE of 19.0, indicating moderate premium valuation. ROCE (19.6%) and ROE (14.3%) reflect healthy capital efficiency. EPS of 16.9 ₹ supports earnings strength, while dividend yield of 1.40% provides modest income. Debt-to-equity at 0.02 shows strong financial stability. However, the PEG ratio (-6.40) highlights weak growth visibility relative to valuation. Quarterly PAT declined slightly (266 Cr. vs 281 Cr.), but YoY profit variation remains positive at 19.8%. Technicals show consolidation near DMA 50 (411 ₹) and DMA 200 (431 ₹), with RSI at 52.3 indicating neutral momentum.
💰 Entry Price Zone: Ideal accumulation range is 390 ₹ – 410 ₹, closer to DMA 50 and below DMA 200 for margin of safety. Current price (415 ₹) is slightly above this zone, so staggered buying is advisable.
📈 Exit / Holding Strategy: For existing holders, maintain positions with a medium-to-long-term horizon (3–5 years). Partial profit booking can be considered near 490 ₹ – 500 ₹ (recent highs). Dividend yield provides steady income, making it suitable for long-term holding in a diversified portfolio.
✅ Positive
- Strong ROCE (19.6%) and ROE (14.3%)
- Debt-light balance sheet (0.02 debt-to-equity)
- Dividend yield of 1.40% provides steady income
- EPS of 16.9 ₹ supports valuation strength
- FII holdings increased (+0.12%) and DII holdings increased (+0.09%)
⚠️ Limitation
- P/E of 24.6 is slightly above industry PE (19.0)
- PEG ratio (-6.40) indicates weak growth visibility
- Quarterly PAT declined (266 Cr. vs 281 Cr.)
- Trading volume below weekly average, showing reduced momentum
📉 Company Negative News
- Quarterly earnings contraction despite YoY growth
- Weak PEG ratio signals limited growth potential
📈 Company Positive News
- YoY profit growth of 19.8%
- FII and DII confidence increased
- Strong 52-week performance (36.9% index)
🏭 Industry
- City gas distribution sector enjoys long-term demand stability
- Industry PE at 19.0 highlights moderate valuation levels
- Sector rotation favors energy and utilities in defensive cycles
🔎 Conclusion
Gujarat Gas is a fundamentally strong, debt-light utility stock with healthy efficiency ratios and steady dividend yield. While valuations are slightly premium and growth visibility is weak, long-term prospects remain stable. Ideal strategy: accumulate near 390–410 ₹, hold for 3–5 years, and book partial profits near highs (490–500 ₹). Best suited for investors seeking stability and modest income in the energy distribution sector.