Prabhudas Lilladher has given Buy recommendation for Mahanagar Gas with a target price of Rs. 1187 in its research report issued on Feb 09, 2022

Prabhudas Lilladher’s research report on Mahanagar Gas

We lower our FY22E estimates by 31% to factor in weak Q3 performance and reduce FY23/24E by ~7%, as we lower our margin assumption to Rs10.2/scm (earlier Rs11). Q3 results were hit, as MGL had to meet 12-16% CNG/PNG domestic demand through LNG (prices were at USD25/mmbtu) to make up for reduced domestic gas supplies. Q3 blended gas cost/scm was Rs25.2 (+90%Q/Q) which led to drop in gross margins at Rs11.8/scm (-36%Q/Q). Currently, government is working on revised gas allocation to better address reliance on high cost spot LNG prices.

Outlook

MGL remains a play on increased gas usage from rising vehicle and PNG penetration and we like the business, given its dominating share in growing markets of Mumbai and its suburbs. Reiterate ‘BUY’ with a TP of Rs1,187 (Rs1,345 earlier).

More Info on Trent

At 12:14 hrs Mahanagar Gas was quoting at Rs 781.80, down Rs 4.40, or 0.56 percent.

It has touched an intraday high of Rs 797.00 and an intraday low of Rs 771.05.

It was trading with volumes of 33,050 shares, compared to its thirty day average of 55,296 shares, a decrease of -40.23 percent.

In the previous trading session, the share closed down 1.62 percent or Rs 12.95 at Rs 786.20.

The share touched its 52-week high Rs 1,284.45 and 52-week low Rs 763.05 on 17 June, 2021 and 14 February, 2022, respectively.

Currently, it is trading 39.13 percent below its 52-week high and 2.46 percent above its 52-week low.

Market capitalisation stands at Rs 7,722.45 crore.

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