Gujarat Energy Shares Plunge on Morgan Stanley Downgrade
By Business Desk
Gujarat Energy Ltd. shares fell 1.23% after Morgan Stanley downgraded its rating to ‘Underweight’ and slashed the target price, citing concerns over spot LNG exposure and competition.
Gujarat Energy Ltd. shares experienced a decline on Wednesday, following a double downgrade issued by Morgan Stanley. The brokerage revised its rating for the company from ‘Overweight’ to ‘Underweight’ and significantly reduced its target price.
Key Market Moves
- Rating Shift: From Overweight to Underweight
- Target Price Reduction: From Rs 523 to Rs 246
- Share Price Drop: 1.23% to Rs 253.25
Morgan Stanley’s updated stance stems from several identified concerns impacting Gujarat Gas. These include the company’s substantial exposure to spot Liquefied Natural Gas (LNG) and intensifying competition from various alternative fuels.
Contributing Factors
- High exposure to spot LNG contracts.
- Increasing competition from alternative fuels.
- Underutilization of downstream gas assets.
- Global LNG markets are expected to remain constrained through H2 2026, maintaining elevated gas costs.
This sustained environment of higher LNG costs proves particularly challenging for Gujarat Gas’s core retail gas business. Concurrently, the rising competitiveness of other fuel options further pressures the company.
The brokerage also highlighted that the company’s expanded operational scale provides limited benefits due to its downstream assets not operating at full capacity. Consequently, Morgan Stanley now expresses a preference for refiners over Gujarat Gas, concluding that the stock’s risk-reward profile is unfavorable, even when considering its current low valuation.