Gujarat Gas Share Price Jumps 8.6% as Nomura Upgrades to Buy, Sets Rs 390 Target

Gujarat Gas Share Price: Gujarat Gas Shares Soar; Here’s What Nomura Has to Say

Gujarat Gas shares witnessed a significant surge on April 17, 2026, as the stock emerged as a top performer in the mid-cap segment. This rally was primarily driven by a bullish outlook and rating upgrade from the global brokerage firm Nomura. In a notable shift in sentiment, Nomura upgraded the stock to a ‘Buy’ recommendation, reversing its previous ‘Reduce’ stance.

The brokerage’s optimism stems from a structural shift in India’s industrial energy consumption, specifically within Gujarat’s massive manufacturing hubs. Nomura believes that industrial demand is showing robust signs of recovery, a trend from which Gujarat Gas, as India’s largest City Gas Distribution (CGD) company, is uniquely poised to benefit.

Nomura Sets Target Price at ₹390 as Shares Climb

On April 17, Gujarat Gas shares climbed 8.14% to close at ₹364.30 on the NSE. The intraday surge reflected immediate investor confidence following Nomura’s report, which assigned a target price of ₹390 for the stock. This target implies a potential upside of approximately 15% from the current market levels.

The core of Nomura’s thesis revolves around the Morbi ceramic industry, the world’s second-largest ceramics cluster. Historically, many manufacturers in this region have fluctuated between using propane and natural gas based on price volatility. However, recent geopolitical tensions and supply chain disruptions have shifted the scales in favor of Piped Natural Gas (PNG).

The Fuel Transition: Propane Shortages and High Costs

The ceramic industry is currently navigating a severe energy crisis. Following the escalation of the West Asia conflict, global supply chains for Liquefied Petroleum Gas (LPG) and its derivative, propane, have faced significant stress. The Indian government has also prioritized domestic household supplies over industrial use to manage inflation and energy security.

According to Nomura, citing industry data, global LPG and propane supplies may take 3 to 4 years to normalize. This long-term supply constraint has forced propane prices to nearly double, jumping from approximately ₹55/kg to over ₹100–120/kg in recent months. For the energy-intensive ceramic kilns of Morbi, which must maintain temperatures of 1,200°C, these costs are unsustainable, leading to the temporary shutdown of over 400 factories in March 2026.

Ceramic Manufacturers in Strategic Talks with Gujarat Gas

Currently, an estimated 78% of ceramic manufacturers in Morbi rely on propane. However, the current “fuel crunch” has catalyzed a massive shift toward natural gas. Nomura reports that a majority of these manufacturers are now in active discussions with Gujarat Gas to secure long-term PNG connections.

The brokerage believes this transition is not merely a temporary fix but a structural shift. Key factors supporting this include:

• Price Stability: Natural gas offers a more predictable cost structure compared to the volatile spot prices of imported propane.

• Government Mandates: Recent policy directives have capped industrial LPG supply at 70% of historical levels, requiring units to register for PNG connections to access even that limited quota.

• Margin Expansion: Morbi-based manufacturers are considering price hikes of 15–25% to offset fuel costs. As these manufacturers pass on costs, Gujarat Gas is expected to see a significant boost in its own industrial margins.

Financial Outlook: EBITDA Forecasts and Market Performance

Nomura has refined its financial modeling for Gujarat Gas to reflect the complex global energy landscape. While the firm lowered its EBITDA forecast for FY27 by 8% due to high spot LNG prices, it significantly raised the FY28 EBITDA estimate by 14%.

This “back-loaded” optimism is driven by expectations that by FY28, the company will have captured a much larger share of the industrial volume as manufacturers fully transition to gas. Furthermore, as global gas prices stabilize, the operating leverage of Gujarat Gas’s vast pipeline network will likely drive superior profitability.

Stock Context and Valuation

Despite the recent single-day surge, Gujarat Gas has had a challenging year. The stock has declined approximately 18% over the past 12 months, underperforming the broader market. This decline was largely due to:

1. High Input Costs: The surge in spot LNG prices during the West Asia conflict.

2. Volume Pressure: Industrial shutdowns in Morbi due to the fuel crisis.

3. Market Cap Compression: The company’s market capitalization recently slipped below the ₹25,000 crore mark.

Looking Ahead: Recovery and Risks

The road to recovery for Gujarat Gas depends heavily on the stabilization of the Morbi cluster. With the Morbi Ceramic Association recently ending a month-long production halt, demand for gas is expected to pick up through the first half of FY27.

However, risks remain. Any further escalation in the Strait of Hormuz could lead to “Force Majeure” notices on gas supplies, as seen earlier in the year. Investors are also closely watching the Q4 FY26 results, where management guidance on FY27 volume growth and the progress of the PNG transition will be critical.

For now, Nomura’s upgrade serves as a “buy the dip” signal for institutional investors, betting that the worst of the fuel crisis is over and that Gujarat Gas will emerge as the primary energy provider for India’s ceramic heartland.