Accumulate Mahanagar Gas; target of Rs 1005: Dolat Capital

Dolat Capital's research report on Mahanagar Gas

MGL Q3FY19 numbers were ahead of estimates on all parameters. Higher realizations were driven by price hikes taken during Q3FY19. Spreads were at all-time high and we do not see much expansion in the spreads going forward. CNG growth on a sequential basis got impacted due to strike by cab aggregators. Growth in the PNG segment – domestic as well as industrial has been encouraging and we expect this traction to continue driven by economics of alternate fuels. With ongoing capital expenditure, MGL is looking to increase its footprints especially in the Raigad region.

Outlook

Green fuel push by the government will entail easy availability of gas supplies. Risk to our call is the apprehension of BG Asia selling its stake. Maintain Accumulate.