Mahanagar Gas Ltd. share price target

Our target is Rs 1,259/sh (27x FY20E standalone EPS). Upgrade to BUY from Neutral. MGLs 4QFY18 revenue came in at Rs 5.87bn, up 11.7% YoY led by 6.7% YoY increase in volumes to 2.8mmscmd and higher realisations at Rs 23.3/scm (+4.7% YoY). EBITDA stood at Rs 1.76bn up 8% YoY. EBITDA margin was up 1.2% YoY to Rs 7/scm. APAT came in at Rs 1.05 bn (+5.5% YoY), owing to higher depreciation, which was up 32% YoY to Rs 0.34bn.

22 May 2018 4QFY18 Results Update | Sector: Oil & Gas MGLs EBITDA of INR1.8b (+8% YoY, -12% QoQ) was below our estimate of INR2b, led by higher cost. Maintain Mahanagar Gas Added 1 lakh new consumers in PNG-domestic, taking the cumulative number to 1.03m, implying 30% penetration of addressable market. Added 19,600 CNG vehicles in 4QFY18 (13,000 autos, 5,500 cabs), taking the total number to ~6 lakh. Added 3,000 domestic consumers in Raigad, 6-7 major towns planned this year through virtual pipelines, 5 CNG stations are operating and 3 are expected to come up soon. Two one-offs in the quarter Debit note of INR7.9cr with effect from August 2017 for Gujarat VAT adjustment to gas supplier. Adjusting for the one-offs, EBITDA/scm stood at INR7.3 in the quarter. Pressure would be primarily from INR depreciation and a rise in discount to OMCs. We expect 6%/8% volume growth for MAHGL in FY19/20.

India is among the top five energy consumers in the world, and given the significant economic benefits of natural gas over other liquid fuels, consumption of natural gas in India increased to 50.7 BCM in FY17 from 47.8 BCM a year ago according to Ministry of Petroleum and Natural Gas, India. The industry requires huge investments to boost pipeline infrastructure (which increased by 4.1% yoy to 17753 km in FY17) to increase natural gas's share in India's total energy mix, for which the GOI has undertaken policy initiatives- PNGRB Plan, expansion of CNG...

Our target is Rs 1,240/sh (27x FY20E standalone EPS). Maintain Neutral. MGLs 3QFY18 revenue came in at Rs 5.8bn, up 15.3% YoY led by 7.1% YoY increase in volumes to 2.74mmscmd and higher realisations at Rs23.1/scm (+8.4% YoY). EBITDA stood at Rs 2bn up 20.2% YoY and 0.3% QoQ. EBITDA margin was at Rs 8.0/scm up 20.2% YoY owing to favourable exchange rate. APAT came in at Rs1.2 bn (+24.7% YoY), owing to higher other income at Rs 141mn (+14% YoY).

Mahanagar Gas (MGL) reported its Q3FY18 results that were broadly in line with our estimates. The topline increased 15.1% YoY to | 638.3 crore, above our estimate of | 620 crore on account of marginally higher volumes, realisations. Volumes increased 7.1% YoY to 2.74 mmscmd and came in marginally above our estimate. CNG volumes grew 6.9% YoY and were at 2.01 mmscmd whereas PNG volumes grew 7.3% YoY and came in at 0.73 mmscmd Although gross margins per scm at | 14.6/scm were above our...

ICICI Securities Ltd | Retail Equity Research Mahanagar Gas (MGL) reported its Q2FY18 results which were below our estimates on the topline front. The topline increased 2.4% YoY to | 588 crore below our estimates of | 634.7 crore on account of lower realisations. The volumes increased by 3.7% YoY to 2.7 mmscmd and came in line with our estimates. CNG volumes grew by 3.2%...

MGL witnessed an improvement in its margins in the last quarter (OPM and NPM of 38.3% and 23.4% as against 31.5% and 19.2% in the corresponding quarter of previous year) mainly on account of better price...

In Q1FY18, Mahanagar Gas (MGL) reported a mixed set of numbers with higher profitability but a disappointing volume performance. The topline increased 9.1% YoY to | 582.9 crore in line with our estimates. Volumes increased 2.7% YoY to 2.6 mmscmd and came in below our estimate of 2.7 mmscmd. CNG volumes grew a mere 1.4% YoY and were at 1.88 mmscmd (our estimate: 1.98 mmscmd)...

MGL is the third largest natural gas distribution company in India. Notably, it is the sole authorised distributor of CNG and PNG in Mumbai & its adjoining areas. CNG penetration in Mumbai is relatively low at 25-30% vs Delhi which is at 35-40%. This leaves a lot of headroom for growth for the company. MGL enjoys the benefit of strong parentage as it is promoted by both GAIL (India) Ltd and BGAPH (a subsidiary of Royal Dutch Shell Plc) MGL's EBITDA/scm is expected to decline to Rs6.75 in FY18E from Rs6.89 in FY17. However, the same is estimated to improve to Rs6.92 in FY19E....

Expect Steady Performance Ahead: The average daily volumes during the quarter grew by 2.4% on QoQ basis. CNG and PNG grew by 2.4% and 2.6% respectively. The sales during the quarter increased by 2.7% YoY and 4.0% QoQ to Rs. 5764 mn. The company reported EBITDA growth of 21.1% YoY; led by lower cost of natural gas. However, on QoQbasis, it was down by 2.4% mainly due to higher R-LNG cost during the month of Jan and Feb of 2017.