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GSPC sitting on Rs1,000 crore gain in Gujarat Gas

The GSPC group — which acquired majority stake in Gujarat Gas Company Limited (GGCL) last year — is sitting on a neat profit of more than Rs1,000 crore in the deal, courtesy the smart rally in the latter's shares in recent weeks.

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The GSPC group — which acquired majority stake in Gujarat Gas Company Limited (GGCL) last year — is sitting on a neat profit of more than Rs1,000 crore in the deal, courtesy the smart rally in the latter's shares in recent weeks.

The company's business plans as well as the anticipation that Narendra Modi-led BJP would form the next government at the Centre have led to the spike in the company's share price.

GSPC group had announced in October 2012 that it was acquiring BG Group's 65.12% stake in Gujarat Gas, the oldest city gas distribution entity in the country. The deal was made at Rs295 per share, while the shares are now trading over Rs400. Subsequently, GSPC also acquired additional 7.58% stake in Gujarat Gas at Rs314.17 per share through an open offer. In all, the group invested Rs2,800 crore to acquire a total of 73.70% stake.

The stock of Gujarat Gas — which saw its status changing from MNC-owned to state PSU controlled — was languishing for some time due to investor concerns and fell to Rs159 levels in August, nearly half of the acquisition price. However, it soon regained the Rs200 levels. The share consolidated in the range of Rs200 to Rs220 for some days, before flaring up dramatically in the last few days.

On March 18, Gujarat Gas shares were trading at Rs244, and have shot up by nearly 70% to Rs413 on Wednesday. On Thursday, the shares opened at Rs413.30 and touched a 52-week high price of Rs422.45, before closing at Rs406.65.

According to Thursday's closing price, market capitalisation of Gujarat Gas is Rs5,215 crore. GSPC group’s 73.70% stake in the company is valued at Rs3,800 crore — a neat Rs1,000 crore gain over what it had invested less than a year ago.

Another trigger behind the sharp rise in Gujarat Gas shares in recent weeks was GSPC group's move to merge Gujarat Gas with GSPC Gas and other entities for better synergy. The Gujarat Gas board is slated to meet on April 21 to consider and approve the proposed amalgamation.

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