GAIL Stocks Surge by 5% on Regulatory Amendments, Boosts Expectations Across Sector

On March 24, 2025, gas stocks experienced a significant upswing, with gains ranging from 0.5% to 5% in early trading. This surge was fueled by expectations of a potential regulatory boost and an upcoming open house discussion scheduled for mid-April, igniting positive sentiment among investors.

Market Movers

GAIL (India) Ltd emerged as a top gainer, soaring by 5.27%. Other significant gainers included:

• Indraprastha Gas Ltd (IGL): Up by 3.48%
• Petronet LNG Ltd: Increased by 1.54%

Hindustan Petroleum Corporation Ltd (HINDPETRO) was the only outlier, declining by 0.42%.

Brokerage Insights

Morgan Stanley anticipates that regulatory changes will primarily benefit long-haul gas players, allowing transporters and upstream producers to gain. However, returns for city gas distributors and Petronet LNG may normalize. The brokerage identified GAIL, Oil India, Reliance Industries, and Gujarat State Petronet as key beneficiaries.

CLSA highlighted potential impacts in the form of lower operating expenses (opex) for city gas distributors like Indraprastha Gas and Mahanagar Gas, and higher tariffs for Gujarat State Petronet and GAIL. They also expect a marginal cost hike for industrial consumers of Gujarat Gas.

Regulatory Developments

The Petroleum and Natural Gas Regulatory Board (PNGRB) has proposed amendments to gas transmission tariff determination regulations, which are currently open for public consultation. An open house discussion is scheduled for mid-April 2025, where stakeholders can share their views and suggestions.

Four proposed tariff changes are expected to benefit gas pipeline transmission companies. While end consumers may face higher costs due to increased pipeline tariffs, long-distance consumers could see reduced costs.

Conclusion

Gas stocks experienced a positive boost due to anticipated regulatory changes favoring pipeline transmission companies. Proposed tariff changes and anticipated lower operating costs for city gas distributors have driven bullish sentiment, making the gas sector an interesting space to watch.

Disclaimer: This news is solely for educational purposes. The securities/investments quoted here are not recommendatory.

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