Accumulate Mahanagar Gas; target of Rs 1138: Dolat Capital

Dolat Capital recommended accumulate rating on Mahanagar Gas with a target price of Rs 1138 in its research report dated June 12, 2020.

Broker Research

June 15, 2020 / 12:54 IST

26 Aug, 2025 12:21

Volume

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Dolat Capital's research report on Mahanagar Gas

MGL’s Q4FY20 results were below our estimates on revenue front and profitability front. Volume de-growth at 2.8 mmscmd (down 7.4% YoY and 8.8% QoQ), against our estimates of 3 mmsmcd due to volumes of approx. 0.3 mmscmd lost in last 10 days of March’20 due to nationwide lockdown. The CNG segment (down 8.8% YoY and 12% QoQ) due no movement of people and vehicles during the lockdown .The PNG segment reported flattish growth YoY and a decline of 3.8% QoQ—domestic segment increased which was offset by decline in industrial and commercial volumes. Gross margins have gone up by 411 bps QoQ and 724.5 bps YoY, due to low gas cost and spot prices and price realisations across segments. MGL got the advantage of relatively low spot prices rather than tied up long term and medium term volumes. With the ongoing capital expenditure, MGL is trying to increase its footprint, especially in the Raigad region. Raigad is expected to peak volumes of 0.6 mmscmd in 3-5 years. However, April month had reduced demand to 25% of Pre Covid levels and May month demand was 42% pre Covid levels.

Outlook

With economy opening up, industrial volumes of 70% have revived, however, Commercial and CNG volumes will recover substantially. The green fuel push by the government will entail easy availability of gas supplies. We maintain Accumulate with a target price of Rs 1,138 (DCF Method).