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Last Updated : May 15, 2019 04:29 PM IST | Source: Moneycontrol.com

Buy Mahanagar Gas; target of Rs 1036: KR Choksey

KR Choksey is bullish on Mahanagar Gas has recommended buy rating on the stock with a target price of Rs 1036 in its research report dated May 13, 2019.

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KR Choksey's research report on Mahanagar Gas


Net sales came at INR 7.2 bn, (+23.1% YoY and -4.0% QoQ) driven by higher realizations but lower CNG and domestic PNG volumes on a YoY basis. Total sales volume for Q4 registered a growth of 7.4% YoY while declining by 0.74% QoQ primarily due to lost CNG volumes (-1.1% QoQ). Gross margins declined to 49.3% on a YoY basis (-109 bps) due to higher gas costs (+25.8% YoY) and a higher excise duty out-go (+24.5% YoY). OPM was further negatively impacted (-40 bps YoY, -216 bps QoQ) to 29.6% owing to higher employee costs (+15.0% YoY, +6.2% QoQ) and other expenses (+19.6% YoY, +9.7% QoQ). EBITDA stood at INR 2.1 bn. (+21.5% YoY, -10.5% QoQ). Lower finance cost (-44.4% YoY, -16.7%) and higher other income (+37.3% YoY, +16.9% QoQ) aided PAT at INR 1.3 bn (+27.4% YoY, -10.0% QoQ). The tax rate remained nearly unchanged at 34.9%. NPM declined by 123 bps QoQ while increasing by 62 bps YoY to 18.5%. The board has recommended a dividend of INR 10.5 per share on a FV of INR 10.


Outlook


We valued the company by assigning a multiple of 18x on the FY20E EPs of INR 57.6 and arrived at target price of INR 1,036 (from INR 1,146 earlier) with a potential upside of 21.3%. We maintain BUY rating on the stock.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

First Published on May 15, 2019 04:29 pm
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