Mahanagar Gas’ (MGL) EBITDA/scm declined to a 13-quarter low in Q2FY26. We believe margins are likely to remain under pressure due to INR depreciation and a jump in HH (US Henry Hub) prices in Q3FY26 (~30% of sourcing, at USD 5/MMbtu vs. <USD4/MMbtu in Q2). MGL had taken a price hike of INR 0.5/scm each in CNG/domestic PNG on 4th Sept’25 to ease the pressure and reduce HH offtake to ToP level of ~60%.
OutlookWe have cut our EBITDA margin assumption by INR 0.1-0.2/scm over FY26-28E to factor in INR depreciation, tariff changes and gas cost, but we remain positive on the stock led by stellar volume growth and improving LNG pricing, coupled with attractive valuations underpinning our stance. Reiterate BUY with a revised TP of INR 1,535 (from INR 1,525).
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