ICICI Direct has given Hold recommendation for Mahanagar Gas with a target price of Rs. 850 in its research report issued on Mar 15, 2022

ICICI Direct’s research report on Mahanagar Gas

MGL is expected to benefit from the proposal (reduction of VAT from 13.5% to 3%). In a likely scenario of the company passing on partial benefit to its customers (Rs 2-2.5/scm), we expect a revision in our volume growth estimates (incremental ~2% leading to ~19% YoY growth in FY23E) as the discount of CNG to traditional fuels would widen (upwards of 60-65%) in an environment of fuel price inflation • Additionally, if the company absorbs the benefit, we expect a revision in our EBITDA margins estimates, keeping the volume growth estimates intact (compared to base case scenario with existing CNG price) • We build in FY24E EPS of Rs 81.4 in a base case scenario. We estimate FY24E EPS at Rs 82.8 and Rs 85.4 in case of i) partial VAT benefit being passed on to customers, ii) MGL maintaining its prices in the near term, respectively.

Outlook

We maintain HOLD recommendation on the stock. We value MGL at Rs 850 i.e. ~10x FY24E EPS.

More Info

At 14:44 hrs Mahanagar Gas was quoting at Rs 758.25, down Rs 35.30, or 4.45 percent.

It has touched an intraday high of Rs 792.75 and an intraday low of Rs 755.75.

It was trading with volumes of 45,928 shares, compared to its thirty day average of 47,081 shares, a decrease of -2.45 percent.

In the previous trading session, the share closed up 5.83 percent or Rs 43.70 at Rs 793.55.

The share touched its 52-week high Rs 1,284.45 and 52-week low Rs 680.20 on 17 June, 2021 and 24 February, 2022, respectively.

Currently, it is trading 40.97 percent below its 52-week high and 11.47 percent above its 52-week low.

Market capitalisation stands at Rs 7,489.83 crore.

Leave a Reply

Your email address will not be published.