Sharekhan has given Buy recommendation for Mahanagar Gas with a target price of Rs. 1000 in its research report issued on Feb 10, 2022

Sharekhan’s research report on Mahanagar Gas

Q3FY22 PAT of Rs. 57 crore (down 74% y-o-y) significantly missed ours and the street’s estimates due a sharp fall in EBITDA margin by 73% y-o-y to Rs. 3.4/scm that offset a strong growth of 19.2% y-o-y in gas sales volume to 3.3 mmscmd. Miss in EBITDA margin was due to decline in CNG/I&C margin led by doubling of gas costs amid high spot LNG prices. Share of R-LNG in the gas sourcing mix at 15% because of lower APM gas allocation. CNG/I&C PNG volumes grew strongly by 27%/16% while domestic PNG volumes declined by 7% y-o-y. Continued mix of LNG for CNG/D-PNG, further hike in APM gas prices and likely higher dealer commissions are key margin concerns as well.

Outlook

We lower the PE multiple to 12.5x FY24E EPS and cut our PT to Rs. 1,000 on margin overhang, while maintaining a Buy on MGL noting its inexpensive valuation of 10x FY24E EPS given steep correction in the stock prices.

More Info on Mahanagar Gas

At 15:56 hrs Mahanagar Gas was quoting at Rs 775.40, down Rs 21.05, or 2.64 percent.

It has touched an intraday high of Rs 793.95 and an intraday low of Rs 775.00.

It was trading with volumes of 34,841 shares, compared to its thirty day average of 56,198 shares, a decrease of -38.00 percent.

In the previous trading session, the share closed down 0.32 percent or Rs 2.55 at Rs 796.45.

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 39.63 percent below its 52-week high and 1.62 percent above its 52-week low.

Market capitalisation stands at Rs 7,659.23 crore.

 

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