Indraprastha Gas Ltd and Mahanagar Gas Ltd shares plunged in the morning trade on March 6, a day after MGL cut prices of compressed natural gas (CNG) by Rs 2.5 a kg.
While Mahanagar Gas tanked over 16 percent, its worst single-day fall ever, the Indraprastha Gas stock was down 7 percent after MGL cut the price to Rs 73.50 a kg.
The price was reduced due to a dip in gas input costs, MGL told exchanges on March 5. CNG now offers savings of 53 percent compared to petrol and 22 percent compared to diesel at the current levels in Mumbai, it said.
Following the update, Citi downgraded the MGL stock to sell and cut the target price to Rs 1,405, expressing concerns about exclusivity and margins. The brokerage will closely watch potential “downside catalysts” over the next 90 days.
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At 12:23 am, IGL was trading at Rs 429.90 on the National Stock Exchange (NSE), down 6 percent from the previous close. As many as 55 lakh IGL shares had changed hands on BSE and NSE combined, compared to a one-week and one-month average trading volume of 18 lakh equity shares.
At 12: 23 pm, Mahanagar Gas shares were trading 16 percent down at Rs 1,314.20 on NSE.
In the past year, IGL stock has fallen over 4 percent, underperforming benchmark Nifty 50 which has gained 26 percent during the period.
Also Read | Mahanagar Gas falls 13% after Citi downgrades stock to 'Sell' from 'Buy'
Incred Equities maintains an 'add' rating on the stock with a target price of Rs 539, saying higher APM gas allocation to city gas distribution (CGD) companies presents a favorable scenario and brings potential benefits to the city gas distribution sector (CGD) sector.
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