Gas stocks have been underperforming the market for quite some time. The argument against them has been multifold, right from stagnation in terms of volume growth, companies not being able to expand in newer areas and the latest one being the threat from EV. Couple of months back, an announcement about pushing the electric vehicle (EV) more aggressively in Delhi, brought pressure on the stocks like IGL. While there is no doubt that over a period of time, EV will dominate, does it mean the end of the business of the gas companies? The answer is probably no, there are many other use cases and narrative about negative impact might be over stretched. Also the street might be ignoring the fact that these companies have enough cash on the balance sheet and also cash flows from existing lines of business to move into new areas which are part of the EV eco system.
It might sound strange to some but there is enough evidence to show that when bulls are in control of the market, some sectors get ignored. Typically sectors where bulls feel that growth in business will not be very high. So there have been periods when sectors like FMCG have underperformed. The most recent example is that of HUL. In FY 24 which by all means has been a raging bull market, it has delivered negative returns. But there are some
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