Shares of Gujarat Gas gained as much as 5 percent on Monday morning after a hike in import duty on propane for commercial use.
The government has increased the import duty on propane for commercial use to 19.25 percent from 2.75 percent on July 1, 2023. Following the hike, the equivalent propane price at Morbi is estimated to have increased by Rs 5-6 per scm to Rs 38.6 per scm from Rs 32-33 per scm earlier.
The increase will offset the price advantage that propane had against natural gas. Natural gas is supplied by city gas distributors to households and fuel stations.
Propane is more energy efficient than natural gas and is delivered through propane tankers. It has diverse applications in industrial, domestic, commercial and auto sectors, as fuel, refrigerant, and source of clean captive power. Natural gas is supplied to households and commercial units through pipelines.
On the other hand, shares of IGL are trading with gains of nearly 2 percent after brokerage firm Citi implied a potential upside of 18 percent on the stock, following a management meeting. Citi has a buy rating on the stock with a price target of Rs 560.
According to Citi, the IGL management stressed that electric vehicles are unlikely to pose a threat over the medium term for CNG vehicles.
The company management also underscored its keenness in exploring & evaluating inorganic opportunities. It expects capital expenditure to average at around Rs 1,500 crore annually over the next few years.
IGL has also contested a PNGRB ruling in the Gurgaon/Faridabad case, resolution timelines of which are uncertain, according to Citi.
Shares of IGL are trading 1.7 percent higher at Rs 481.45, while those of Gujarat Gas are trading 3.7 percent higher at Rs 482.
First Published: Jul 3, 2023 10:40 AM IST
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