Gujarat Gas hits fresh record high on heavy volumes

The stock surged 14% to Rs 741 on BSE.

Gujarat Gas Company has surged 14% to Rs 741, also its record high on BSE, in otherwise weak market on back of heavy volumes.

Till 1336 hours, a combined 4.02 million shares representing 3% of total equity of the company changed hands against an average 0.45 million shares that were traded daily in past two weeks. The S&P BSE Sensex was down 0.58% at 27,540.

In past one month, the stock rallied 42% from Rs 521 on November 21, 2014 as compared to 2.8% decline in the benchmark index.

In April 2014, the board of directors of Gujarat Gas Company (GGCL) had approved amalgamation of the company along with Gujarat Gas Financial Services Limited (GFSL), Gujarat Gas Trading Company Limited (GTCL), and GSPC Gas Company Limited (GSPC Gas) into GSPC Distribution Networks Limited (GDNL).

As a measure to consolidate the city gas distribution (CGD) business, GSPC Group management has decided to amalgamate the city gas distribution business of GSPC Gas, GGCL, GFSL and GTCL into GDNL by way of a Court approved Scheme of Amalgamation, the company said in a statement.

The merger will be an all-stock transaction, with no cash payments for purchase of shares.

CRISIL, the rating agency, believes that the consolidated entity will be the largest CGD Company in India, and its business risk profile will benefit from the increased scale of operations. However, compared with GGCL's strong financial risk profile, the merged entity's financial risk profile will remain moderate over the medium term, marked by a gearing of above 1 time.