Shares of Gujarat Gas surged and hit a 10% upper circuit on Monday after the boards of Gujarat State Petronet Limited (GSPL) and Gujarat State Petroleum Corporation (GSPC) approved a merger of the two entities into Gujarat Gas.
The merger announcement was made on Friday evening and includes a plan to demerge the Gas Transmission business, which will be integrated into a newly formed entity, GSPL Transmission Ltd., once the merger process is completed.
What Will GSPC and GSPL Shareholders Get?
Shareholders of the merging companies stand to benefit from specific exchange ratios. Shareholders of GSPC will receive 10 shares of Gujarat Gas for every 305 shares they hold, while shareholders of GSPL will receive 10 shares of Gujarat Gas for every 13 shares they own.
Additionally, Gujarat Gas shareholders will be granted one share of GSPL Transmission Ltd. for every three shares they currently hold following the demerger of the Gas Transmission business. The merger is expected to simplify the company’s holding structure and unlock significant value for shareholders by streamlining operations and opening up new growth opportunities.
Antique on Gujarat Gas
The restructuring has been positively received by market analysts. Antique Stock Broking maintained its “buy” rating on Gujarat Gas and raised its price target from Rs 690 to Rs 726. The firm believes the merger will be immediately value accretive for Gujarat Gas, enabling the company to quickly utilize the Rs 7,200 crore in carry-forward losses from GSPC.
Additionally, synergy benefits and the trading margin that GSPC currently charges Gujarat Gas are expected to be valued at a higher multiple post-merger.
Stock Performance in Last One Year
Gujarat Gas shares have delivered positive returns across various time frames. Over the last month, the stock has shown a positive return of 2%, indicating short-term growth. In the last six months, the performance has been even more impressive, with a substantial increase of 14%, showcasing the stock’s resilience and upward momentum.
Year-to-date, Exide Industries shares have surged by 38.53%, emphasizing the stock’s positive trajectory in the current calendar year. Looking back over the last twelve months, the stock has demonstrated significant growth, surpassing 46.86%. These consistent positive returns underscore the stock’s strong performance and appeal to investors.
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