Prabhudas Lilladher's research report on Mahanagar Gas
MAHGL reported an EBITDA of Rs 4.8 bn in Q2FY24, down 8% QoQ and below PLe of Rs 5bn. PAT came in at Rs 3.4 bn, down 8% QoQ in line with estimates. Total volumes grew 5% QoQ to 3.6 mmscmd aided by growth in CNG and industrial PNG volumes. Total volume growth remains at 3% YoY. Although the company is taking few initiatives to rope in consumers, we believe the effect may not be significant.
Outlook
Hence, we build in a muted volume growth of 2% CAGR over FY24-26. We expect cost pressure as a result of the initiatives and build an EBITDA/scm of Rs13.5/10/10/scm over FY24/FY25/FY26. The stock is currently trading at 8.3x P/E and 5.5x EV/EBITDA. We maintain Hold rating on the stock with a target price of Rs 1,065 based on 12x FY26 P/E.
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