Following the company's announcement that its board of directors had approved the merger and demerger plan of Gujarat State Petroleum Corporation (GSPC) Group companies, shares of Gujarat Gas Ltd. shot up more than 10 per cent to reach a 52-week high of Rs 689.9 apiece on the NSE.
Stock performance
The shares of Gujarat State Petronet Ltd (GSPL) experienced a surge of over 4 per cent during morning trading, ultimately reaching an intraday high of Rs 468.00 per share on the NSE.
The stock opened at Rs 419.95 per share on the national stock exchange, and was trading at Rs 460.05 per share on the Indian bourse.
Gujarat gas shares zoomed more than 10 per cent after the announcement. The Stock reached a day-high price of Rs 689.95 per share on the dalal street.
The stock opened at Rs 637.15 per share on the national stock exchange. The stock was trading at Rs 660.70 on the indian stock exchanges.
The boards of Gujarat State Petroleum Corporation Limited (GSPC), Gujarat State Petronet Limited (GSPL), and Gujarat Gas Limited (GGL) have approved a restructuring scheme among entities of the GSPC Group, according to a filing Gujarat Gas made to the stock exchanges on Friday, August 30.
The Gujarat State Petroleum Corporation (GSPC) Group has disclosed plans to combine and demerge its entities in order to simplify its corporate structure.
The goal of the demerger plan is to free up value for the shareholders while streamlining the holding structure. The combination of Gujarat Gas and GSPC also intends to increase operational scale and boost productivity.
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EBITDA boost
According to the filing, the merger also aims to get rid of related party transactions, which should boost EBITDA (Earnings Before Interest Taxes, Depreciation, and Amortisation) and RoCE.
Additionally, the company predicts that the merger will allow for targeted growth strategies in other industries while increasing the market share of the gas trading business.
Shareholders of GSPC
10 fully paid equity shares of Gujarat Gas, valued at Rs 2, will be issued to GSPC shareholders for every 305 fully paid equity shares, face value of Rs 1, as part of the company's merger with GGL.
In addition, GSPL and Gujarat Gas will merge, and for every 13 fully paid equity shares of Rs 10 that GSPL shareholders currently hold, 10 fully paid equity shares of GGL, face value of Rs 2, will be issued. GGL and GSPC Energy Ltd. (GEL) will merge as part of the plan.
Demerger of gas transmission business
Additionally, the business will demerger GGL's gas transmission operations and assign them to a different company known as GSPL Transmission Limited (GTL). One fully paid equity share of Rs 10 each of GTL will be issued for every three fully paid equity shares of Rs 2 each that shareholders of GGL currently hold as part of this demerger. The resulting company GTL's shares will list separately on the exchanges.
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