Gujarat Gas at new high

Gujarat Gas Ltd (GSL) is the top gainer on the BSE and a major newsmaker. The stock, which had closed on Friday at Rs.606.70, opened today morning at Rs.632.45 and rose to a new 52-week high at Rs.689.45. It is currently trading at Rs.655 levels.

The market is very happy with its restructuring plan. As per the restructuring scheme among the group entities, it will eliminate the layered structure of the GSPC Group, unlocking value for its various stakeholders including public at large, and will include the following transactions

1. Merger of GSPC with GGL: Issuance of 10 fully paid equity shares of Rs.2 each of GGL for every 305 fully paid equity shares of  Re.1 each held by the shareholders in GSPC.
2. Merger of GSPL with GGL: 10 fully paid equity shares of Rs.2 each of GGL for every 13 shares of Rs.10 each held by the shareholders in GSPL
3. Merger of GSPC Energy Limited (‘GEL’) with GGL.
4. Demerger of the gas transmission business from GGL into the newly incorporated entity GSPL Transmission Limited (‘GTL’): Issuance of 1 equity share of Rs.10 each of GTL for every 3 equity shares of  Rs.2 each, held by the shareholders in GGL.

Giving further clarity on the same, the company said that the merger of GSPC with GGL, by combining the inter-linked businesses, will unlock business synergies, amplifying the scale of operations and improving efficiency due to optimum utilisation of resources. The elimination of related party transactions will improve GGL’s EBITDA and RoCE. The synergistic benefit will also increase the market share of gas trading business while enabling focused growth strategies in other Energy sectors.

The merger of GSPL with GGL and subsequent demerger of the natural gas transmission business will lead to simplification of the existing layered structure between GSPL and GGL. The main objective of demerger is to ensure adherence to the regulatory compliance and enable potential value unlocking for GSPL shareholders and enable the business to grow independently. The resulting company, namely, GTL, will have equity shares listed on the stock exchange.

The management’s business growth projections for GGL estimate it to become one of India’s largest integrated players with presence in gas trading & city gas distribution business.