Jefferies, also has a buy call on Gujarat Gas with a price target at Rs 185, said the outlook is strong with Morbi volumes now at 4.5 mmscmd.
Gujarat Gas shares rallied 4 percent intraday on May 7 as analysts remained positive on the stock after March quarter earnings.
The stock has surged 30 percent in last three months. It was quoting at Rs 164.90, up 3.61 percent on the BSE, at 10:04 hours IST.
The city gas distribution company, on May 6, reported a 77 percent jump in its March quarter net profit on the back of higher sales.
Profit in the January-March period increased to Rs 116.54 crore, or Rs 1.69 a share, against Rs 65.95 crore, or Rs 0.96 per share in corresponding period of last fiscal.
Revenue from operations jumped to Rs 1,963.26 crore from Rs 1,777.82 crore in January-March 2018.
For the fiscal year 2018-19, Gujarat Gas' profit shot up 43 percent to Rs 417 crore.
Gujarat Gas is India's largest gas distribution company in terms of sales volume, geographical spread and customer base. Currently, Gujarat Gas sells about 8.5 mmscmd of natural gas.
While having a buy call on the stock, CLSA increased its target price by 30 percent to Rs 195 from Rs 150 apiece.
"Company missed on EBITDA front but volume jumped after court order drove upgrade," the brokerage said, adding the soft LNG price is a tailwind for 2019.
Gujarat Gas in its statement said the National Green Tribunal had ordered on March 6, 2019 to ban the use of coal based gasifiers in Morbi, Gujaral. As a result of this order, the industrial sales volumes in Morbi have increased from mid-March 2019 and are currently flowing in the range ofaround 4.50+ mmscmd, it added.
The company added 63 new CNG stations in FY19. It added close to 1 Lakh domestic connections and 300 industrial customers during FY19.
CLSA raised its volume estimates by over 1 mmscmd, which drives EPS up by 25-27 percent and expects a significant volume ramp-up in first half of FY20.
Jefferies, also has a buy call on Gujarat Gas with a price target at Rs 185, said the outlook is strong with Morbi volumes now at 4.5 mmscmd.
"We see upside risks to our FY20 volume estimates and may see upside of 12 percent to our FY20 volume & EBITDA estimates," it added.
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