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Last Updated : Aug 20, 2019 10:49 AM IST | Source: Moneycontrol.com

Mahanagar Gas climbs 12% after British Gas sells entire stake; Jefferies maintains buy

In April this year, BG Asia had reduced its stake in Mahanagar Gas from 32.5 percent to 24 percent. State-owned entity GAIL India, the Indian promoter, held 32.50 percent stake in the company

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Mahanagar Gas: MFs' holdings each quarter: Sep - 8.75%, June - 5.34%, March - 3.91% FIIs'holdings each quarter: Sep - 19.03%, June - 12.7%, March - 9.68% (Image: company website)
Mahanagar Gas: MFs' holdings each quarter: Sep - 8.75%, June - 5.34%, March - 3.91% FIIs'holdings each quarter: Sep - 19.03%, June - 12.7%, March - 9.68% (Image: company website)
 
 
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Shares of Mahanagar Gas rallied nearly 12 percent intraday on August 20 after a foreign promoter offloaded its entire stake in the company.

British Gas sold 98 lakh shares in the natural gas distribution company through block deals on the National Stock Exchange.

BG Asia Pacific Holdings Pte Limited, a wholly=owned subsidiary of Shell, held 10 percent stake (representing 98,77,780 shares) in the company, as per June shareholding pattern available on exchanges.

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At 1013 hours IST, the stock traded with volumes of 3,75,145 shares, compared to its five-day average of 72,457 shares on the NSE and on the BSE, it traded volumes of 52,56,774 shares, compared to its five-day average of 12,33,989 shares.

In April this year, BG Asia had reduced its stake in Mahanagar Gas from 32.5 percent to 24 percent. State-owned entity GAIL India, the Indian promoter, held 32.50 percent stake in the company.

"This could be a good opportunity to accumulate the stock as valuations are attractive in the context of 6 percent free cash flow yield and 10 percent FY19-22 earnings CAGR," said Jefferies, which expects margins to expand to Rs 9/scm in FY20-22 from Rs 8.20/scm in FY19.

The brokerage has maintained buy call on the stock.

Mahanagar Gas reported 33 percent year-on-year growth in June quarter net profit at Rs 170.24 crore and its revenue grew 23 percent to Rs 831.2 crore compared to year-ago.

While reiterating buy call on the stock after earnings, Prabhudas Lilladher said strong Q1 was led by margin expansion, but high base effect and 12 percent decline in CNG volumes to state buses due to scrappage of old buses impacted volume.

The brokerage maintained its earnings estimate for FY20/21E. "MGL remains a play on increased gas penetration from rising vehicle and PNG penetration. We continue to like MGL's business given their dominating share in the growing markets of Mumbai and suburbs," it said.

For Q1, CNG and PNG volumes were at 270mscm (up 2 percent YoY) and 73mscm (up 7 percent YoY), respectively. High base effect (CNG and PNG growth of 12.6 percent and 10.1 percent) also dimmed Q1 volume traction.

"Going forward, CNG volume is likely to remain healthy on the back addition of new three-wheelers along with geographical expansion to Raigad and Karjat. Also, the government's push for PNG's domestic connections will support volumes," Prabhudas Lilladher said.

The stock was quoting at Rs 848.90, up Rs 61.90, or 7.87 percent amid high volumes on the BSE at 1013 hours IST.

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First Published on Aug 20, 2019 10:49 am
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