Despite the rebound seen in shares of Indraprastha Gas, Mahanagar Gas and Gujarat Gas from the lows of November makes fundamentals further unsupportive for these companies, according to brokerage firm Nuvama.

The brokerage said that the market is pricing in an elusive GST rollout for natural gas, but are ignoring an imminent plunge in the net profit of these companies.

Nuvama believes that in case there is a GST on CNG rollout at 12%, there is an upside potential between 9% to 11% to the financial year 2026 Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of these city gas companies.

However, sources have told CNBC-TV18 that the inclusion of GST is not on the agenda of the upcoming GST council meeting and that the council is unlikely to discuss this proposal during Saturday’s meet.

While administrative impasse is proving to be a challenge, according to Nuvama, who also added that the anti-profiteering laws would mean that any benefit must be passed on.

For the December quarter, Nuvama expects the EBITDA margin per standard cubic meter (scm) of these City Gas companies to fall between 17% and 44% sequentially as a realisation uptick of 1% falls short of the average gas cost hike betwen 4% to 11%, according to Nuvama.

The brokerage has maintained its “reduce” recommendation on IGL and MGL, while it has a “hold” rating on Gujarat Gas.

Shares of IGL, MGL and Gujarat Gas have rebounded 22%, 10% and 12% respectively from the lows of November.

The companies faced a steep correction in their stock price after the twin de-allocation seen in the APM gas to these companies.