Mahanagar Gas Ltd. share price target

Mahanagar Gas Limited reported 22.9% YoY increase in revenue in Q1FY20 to reach Rs. 831 cr. primarily driven by 24.3% YoY CNG segment. (Contributing 68.3% to total revenue) and 17.8% YoY growth in PNG segment (Contributing 30.7% to total revenue). Q1FY20 EBITDA rose 31.2% YoY to Rs 276.8 cr. CNG sales volume were up by 2.0% YoY to 196.9 SCM million. PNG domestic sales volume have grown at a faster rate of 9.4% YoY to 36.4 SCM million and is the only segment to grow in terms of volume on QoQ basis. EBITDA grew to Rs. 277 cr. up 31.2% YoY from Rs. 211 cr. in Q1FY20, and margin came in at 33.3% (+210bps y-o-y) helped by higher volumes of...

Mahanagar Gas has reported 1QFY20 earnings with adoption of IndAS-116. EBITDA came in at INR2.8b (+25% est.; +31% YoY), with highest ever EBITDA/scm of INR10.3 (v/s INR8.1 in 1QFY19 and INR7.9 in 4QFY19). MAHGL soucres it's gas for ind/comm on spot basis. Sharp decline in spot LNG prices compared with lack of commensurate correction in competing liquid fuels resulted in highest ever EBITDA/scm. Depreciation increased +26% YoY to INR0.4b....

MGL did not win any new GAs in either of the recently concluded ninth or tenth rounds of CGD biddings. This factor may weigh on its long-term growth. We believe that the company will continue to enjoy pricing power and be able to maintain its per unit spread. This is because of a loyal customer base of CNG and commercial customers (who together comprise ~80% of total sales mix), that are less price sensitive than industrial customers. Moreover, we do not foresee any significant regulatory adversity in its CGD business either through a change in gas allocation or capping returns. We maintain BUY on MGL post an impressive performance on spreads albeit disappointing volume growth. Our TP is Rs 1,133/sh (19x Jun-21E standalone EPS).

mmbtu), as it procured spot LNG in 1QFY20. Despite sequential increase in APM gas prices (from US$3.36 to US$3.69/mmbtu) the company's cost of gas reduced by 5% QoQ. Reported EBITDA grew by 31% YoY and 29% QoQ to Rs2.7bn (18%/26% above street and our estimates), while EBITDA realisation of Rs10.3/scm improved by Rs2.2/scm YoY. Other expenses declined by 13% QoQ impacted by Ind As-116. Reported net profit grew by 33% YoY and 28% QoQ to Rs1.7bn (above street and our estimates). MAHGL is reaping benefits of lower spot LNG prices, which is likely to continue at least in 2QFY20. In view of the recent correction in the stock price,...

MGL reported lower than anticipated volume growth of 3.8% YoY against our expectations of 7.1% YoY. Lower growth in CNG volume at 2% YoY (our estimate: 6.5%) to 2.16 mmscmd mainly led to disappointing volume growth. On the PNG front, growth momentum in terms of volumes was maintained which increased 8.7% YoY to 0.8 mmscmd. The volume growth rate is lower than MGL's average growth rate of 6-6.5% witnessed over last few years. We have marginally lowered MGL's volume outlook to 5-6% CAGR in the coming years due to lower CNG growth assumptions. Given...

Mahanagar Gas's (MAHGL) Q1FY20 PAT was well above estimates at Rs 1.7bn (+20% YoY).

MGL is an excellent cash annuity model with decent dividend yield. Promoter offloading some stake has weighed down on the valuations, however, the uncertainty of around this is over by BG Asia selling off their remaining 10 pc stake (complete exit) as markets have reacted positively to the news. We structurally like MGL as there is improvement in their operational performance. MGL has lesser GA's than its peers but their profitability is higher than its peers. With volume outlook looking stable and spreads likely to sustain, outlook gets better. Based on DCF valuation,...

Volume traction with strong spreads. Maintain Accumulate. MGL's Q4FY19 results were below our estimates on all parameters. The CNG growth on a sequential basis was impacted by the BEST strike. The growth in the PNG segmentdomestic was flat and industrial was low was adversely affected, due to competing fuels. We expect the industrial and commercial segment to revive as crude oil prices rise. With the ongoing capital expenditure, MGL is trying to increase its footprint, especially in the Raigad region. The green fuel push by the government will entail easy...

MGL did not win any new GAs in either of the recently concluded ninth or tenth rounds of CGD biddings. This factor may weigh on its long-term growth. We believe that the company will continue to enjoy pricing power and be able to maintain its per unit margin due to a loyal customer base of CNG and commercial customers (who together comprise ~80% of total sales mix) that are less price sensitive than industrial customers. Moreover, we do not foresee any significant regulatory adversity in its CGD business either through a change in gas allocation or capping returns. We maintain BUY on MGL after an in-line performance in 4QFY19. Our target is Rs 1,113/sh (19x Mar-21E standalone EPS).

The quarter reported healthy volume growth rate of 7.4%, higher than MGL's average growth rate of 6-6.5% witnessed over last few years. The higher growth was on account of high CNG volumes at 2.2 mmscmd (increase 6.9% YoY) due to higher usage of public transportation and higher fuel consumption per vehicle. Also, on the PNG front, volumes continued their growth momentum of 9% YoY to 0.8 mmscmd. MGL plans to aggressively set up CNG stations (current: 236 stations) with 20-25 additions per annum. On PNG front too, MGL has plans run rate of more than 1 lakh PNG...