Bajaj Auto, Gujarat Gas and Gujarat State Petronet clinch fresh 52-week high; here’s why

On Monday, over 128 stocks advanced to 52-week highs. The benchmark indices, NIFTY50, traded at a 25,300 level up 0.29%, and SENSEX at 82,534 level, up 0.30%. The Nifty Bank is at the 51,381 mark, up 0.06%, while the fear gauge India VIX rose marginally to 13.61 level.

The broad market indices traded in positive terrain, with Nifty Midcap 100 up 0.04% and Nifty Smallcap 100 up 0.18%. The major sectoral indices traded mixed with Nifty’s FMCG, being the top gainer, while Nifty’s Media was the top loser.

Top three stocks that hit a fresh 52-week high on Monday, September 2, 2024

Bajaj Auto Ltd - The homegrown 2-wheeler and 3-wheeler maker’s stock price traded to a 52-week high at ₹11,144 after surging over 2.32% in Monday’s session, surpassing the company's market cap mark of ₹3.10 lakh crore.

The share price witnessed a sharp upward spike as the company reported robust performance for August 2024, with total sales increasing by 16% YoY, reaching 397,804 units. The company’s domestic sales saw a notable rise of 24%, totalling 253,827 units, while exports grew by 5%, amounting to 143,977 units.

The company’s domestic 2-wheeler segment saw a growth of 30% YoY to 2,08,621 units, this growth in domestic sales is attributable to several factors, including improved rural demand and a favourable monsoon season, which boosted consumer sentiment. With the festive season ahead the growth trend is likely to sustain further.

In the 2-wheeler EV space, Bajaj is in a neck-to-neck fight with TVS for grabbing the 2nd spot in terms of volume, with Bajaj just 842 units behind TVS. In August 2024, Bajaj’s Chetak retailed 16,699 units with a 154% YoY increase. While TVS is the number 2 EV player on two wheels, it sold 17,541 units of iQube e-scooters, up 13% YoY.

Bajaj Auto’s stock has rallied over 15% in the last one month, while 139% in the last 12 months

Gujarat Gas (GGL) Ltd - The leading city gas distributor and part of Gujarat State Petroleum Corporation’s (GSPC) scrip sky-rocketed 13.67% on Monday, peaking at a 52-week high at ₹689.95. The stock witnessed a strong buying interest as trade volume surged to 1.84 crore shares with a trade value worth ₹1,221.91 crore.

Stock price reacted as the company informed in a filing to the stock exchanges that 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.

The scheme is expected to result in achieving better business synergies and growth, simplification of GSPC group holding structure and unlocking of shareholders’ value along with improved efficiency and enhanced scale of operations and optimum utilisation of resources.

Currently Government of Gujarat (Promoter) holds 55.65% of GSPC, and 6.53% of GGL, while GSPC (Promoter for GSPL) holds 37.63% of GSPL and GSPL ((Promoter of GGL) holds 54.17% in GGL.

The Scheme of Arrangement would be as follows - The amalgamation of GSPC into GGL, through the issuance of GGL’s shares to shareholders of GSPC at a share exchange ratio of 10 shares of GGL (FV ₹2) for every 305 equity shares of GSPC (FV ₹1), Amalgamation of GSPL into GGL, through the issuance of GGL’s shares to shareholders of GSPL at 10 shares of GGL (FV ₹2) for every 13 equity shares of GSPL (FV ₹10). Demerger of gas transmission business into GSPL Transmission Limited (GTL), by issuing shareholders of GGL share of GTL (to be listed subsequently) at 1 equity share of GTL (FV ₹10) for every 3 equity shares of GGL (FV ₹2)

Also, amalgamating GSPC Energy Ltd (GEL) into GGL, without any issuance as it would become a wholly owned subsidiary before its amalgamation

This scheme is expected to improve the margins and return ratios of Gujarat Gas (GGL) on account of the consolidation of the gas trading business of GSPC with the distribution business of GGL and will eliminate related party transactions between GSPC and GGL.

The company announced a restructuring plan to simplify its corporate structure. As per the plan, the company will operate through two main entities: Gujarat Gas Ltd and GSPL Transmission Ltd. The scheme of amalgamation attracted strong interest from investors towards the stock.

Through the scheme layered structure would be simplified and further the demerger of the natural gas transmission business will ensure adherence to regulatory requirements and potential value unlocking for GSPL shareholders, according to the management.

Value unlocking for GSPL shareholders would be a result of the issuance of the shares of Gujarat Gas (GGL) and GSPL Transmission (GTL) through the arrangement.

GSPL’s merger with Gujarat Gas (GGL), will allocate 10 fully paid equity shares of GGL of ₹2 each for every 13 fully paid equity shares of ₹10 each held by the shareholders in GSPL.

Through the scheme, the resulting structure would result in two companies 1. Gujarat Gas Ltd (GGL) deals with city gas distribution, Gas Trading, E&P, Renewables Business and related investments with promoters holding 25.86% stake, while 2.GSPL (GTL) deals with Gas Transmission and related investments in gas transmission with the promoter holding a 25.86% stake.