Using the reported exit of GAIL (India) Ltd, the race to acquire the BG Group‘s controlling stake of 65.12 per cent in Gujarat Gas Co Ltd (GGCL) narrows down between the Gujarat State Government-controlled GSPC Group plus the Ahmedabad-based private sector energy major, Adani Group.

As the information room (a precondition in any bidding) for the subsequent round of bidding is most likely to open this week, the strongest competitor in the pack is definitely Adani. Sources are hopeful that BG may complete the divestment of GGCL as early as in March.

In the existing market place capitalization of a little more than Rs 5,000 crore at Rs 391 a share of Rs 2 every, the 65 per cent stake ought to expense practically Rs three,250 crore (19 times higher than the original investments of roughly Rs 170 crore by BG in 1997). While GAIL has reportedly located the GGCL valuation as overpriced throughout the run up to location the non-binding provide, market sources suggest that Adani is now all set to produce the competition hot for GSPC. At present, managing India’s largest city gas distribution outfit GSPC Gas backed by a totally integrated gas vertical, GSPC is keen to acquire Gujarat Gas, to make sure its close to monopoly in almost 8 mmscmd (million metric standard cubic metre every day) robust city gas market in Gujarat. Incidentally, Gujarat could be the biggest gas marketplace in India.

Marketplace analysts, nevertheless, really feel that the reported exit of central public sector undertakings like GAIL and Indian Oil from the race on grounds of “over valuation” must indirectly create pressure on State-owned GSPC to become adventurous enough in its valuations for GGCL.

“Gujarat Gas has limited back-end integration. The company’s margins are already under pressure because of declining trend availability of less costly domestic gas. Going forward this pressure really should only intensify,” an analyst using a key equity study outfit told Organization Line. “If fundamentals are to become regarded, the present market place valuation of GGCL is unquestionably on the greater side,” he mentioned.

Though officially all sides are tight-lipped, sources recommend that even the GSPC camp is concerned on valuation troubles. And, that precisely brightens the odds for Adani.

“Though everyone is ready to make a tough bargain, Adani‘s – which has been aggressively seeking forward to expand its foothold in gas distribution segment – certainly have an edge in this regard when compared having a public sector undertaking,” a source suggested.