Gujarat Gas Limited has announced comprehensive support measures to revive Morbi's ceramic industry through assured gas supply and price stability amid recent geopolitical disruptions. The company's strategic intervention addresses critical infrastructure requirements for one of India's key ceramic manufacturing hubs.

Crisis Response and Recovery Initiative

The recent geopolitical crisis led to surge in raw material costs, restrictions on industrial propane usage, and increased freight expenses. These challenges prompted several ceramic units in Morbi to voluntarily suspend operations starting mid-March 2026, affecting the livelihood of more than 2 lakh workers.

Gujarat Gas responded by proactively sourcing natural gas from non-Middle East markets at spot rates to maintain continuous supply in line with Government of India directives. The company's Geographical Area and Corporate teams engaged extensively with industry stakeholders, including the Morbi Ceramic Association, to facilitate restart of operations.

Operational Recovery Metrics

The revival efforts have shown significant positive results. Industrial activity in Morbi has gradually resumed, with substantial improvements in gas consumption and active units.

Future Projections and Support Measures

Gujarat Gas has addressed key industry concerns related to gas availability, pricing, and supply volumes. The company has initiated execution of gas supply agreements with ceramic units, providing operational certainty to manufacturers.

The number of active gas consumers is expected to increase from the current approximately 290 units to approximately 675-700 units. Total gas consumption is projected to reach 6-7 mmscmd in May 2026.

Strategic Commitment

Leveraging its diversified sourcing strategy, Gujarat Gas has assured customers of uninterrupted gas supply along with price certainty for the entire month of May 2026. This commitment has boosted confidence among manufacturers and is expected to accelerate the revival of production across the cluster.

The company is also facilitating PNG connections for employee canteen facilities within manufacturing units, further strengthening the overall ecosystem. The resumption of operations is set to benefit nearly 2 lakh workers who were impacted by the temporary shutdown during the crisis.

Nomura Securities has maintained its Buy rating on Gujarat Gas Limited with a target price of ₹390, following the Ministry of Corporate Affairs (MCA) approval for the three-way amalgamation of Gujarat State Petronet Limited (GSPC), Gujarat Gas Limited (GGL), and Gujarat State Petroleum Corporation Limited (GSPL). This major corporate restructuring is expected to create significant value through operational synergies and financial benefits.

MCA Approval and Merger Benefits

The amalgamation has received crucial regulatory clearance, paving the way for creating an integrated gas value chain that will streamline operations across the group companies. The merger structure is designed to eliminate operational redundancies while maximizing synergies.

Financial and Operational Synergies

The three-way merger is expected to deliver immediate earnings per share (EPS) accretion, making it financially beneficial from day one. The combined entity will benefit from lower marketing margins in the city gas distribution (CGD) business, directly boosting profitability. Access to substantial tax losses worth ₹72.00 bn provides significant tax optimization opportunities for the merged entity.

Market Dynamics and Investment Thesis

Nomura's continued Buy recommendation is supported by multiple favorable factors beyond the merger. The Iran crisis is creating positive tailwinds for the natural gas sector, while potential fuel price hikes are expected to boost compressed natural gas (CNG) demand as consumers seek cost-effective alternatives.

Rerating Potential and Outlook

The successful completion of this amalgamation is expected to trigger a rerating of the stock, as the market recognizes the value creation from the integrated business model. The removal of the conglomerate discount typically associated with complex group structures should support valuation expansion. Nomura's ₹390 target price reflects confidence in the company's ability to capitalize on both the merger benefits and favorable market conditions in the natural gas distribution sector.