Prabhudas Lilladher's research report on Mahanagar Gas
We leave our FY23/24E estimates unchanged. Q1 results were ahead due to higher than expected volumes (+7.4%) and margins (Rs9.1/scm vs Rs8 expected). In the near term, rising price of domestic gas supplied to City Gas Distribution (CGD) due to blending of high priced spot LNG volumes will be a concern (even though company passed it on to customers). However, RILKGD6’s higher blending with additional deep water supplies of 12mmscmd (to gradually ramp up) from Oct-22 will ease pricing pressure. CGD industry has made representation to the government of rising gas prices and company remains hopeful of near term solution.
MGL remains a play on increased gas usage from rising vehicles and PNG penetration. We like the business because of its dominating share in growing markets of Mumbai and its suburbs. Reiterate ‘BUY’ with a TP of Rs1,103 (unchanged).
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