Moneycontrol
Feb 15, 2017 05:14 PM IST | Source: Moneycontrol.com

Buy Mahanagar Gas; target of Rs 1065: Edelweiss

Edelweiss is bullish on Mahanagar Gas has recommended buy rating on the stock with a target price of Rs 1065 in its research report dated February 13, 2017.

 
 
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Edelweiss' research report on Mahanagar Gas


Mahanagar Gas (MGL) reported robust Q3FY17 performance with standalone PAT at INR990mn (up 30% YoY, down 3% QoQ) 11% ahead of estimates, primarily on better than expected EBITDA margin. Volume growth (up 5% YoY, down 2% QoQ) missed estimates by 2% due to higher than expected temporary impact of demonetisation, which has now returned to normalcy. EBITDA margin, at INR 7.1/scm (IGL: INR 6/scm), expanded 25% YoY, significantly higher than estimated INR 6/scm, as the company partially passed on benefits of lower APM price.


Outlook


We estimate robust 7% volume CAGR over FY16‐21, led by increased coverage in existing circles (Mumbai, Thane) and commissioning of Raigad, while margins will moderate due to projected APM price revival. Maintain ‘BUY’ with DCFbased target price of INR 1,065.

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