Hold Mahanagar Gas; target of Rs 1145: ICICI Direct

ICICI Direct recommended hold rating on Mahanagar Gas with a target price of Rs 1145 in its research report dated June 12, 2020.

Broker Research

June 15, 2020 / 15:24 IST

26 Aug, 2025 12:21

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ICICI Direct's research report on Mahanagar Gas

Mahanagar Gas’ (MGL) results for Q4FY20 were in line with our estimates on the profitability front. Topline fell 5.1% YoY to Rs 752.7, above our estimate of Rs 696.2 crore due to higher realisations. Volumes were at 2.8 mmscmd, down 7.4% YoY, due to lockdown impact. Gross margins were up Rs 2.1/scm YoY to Rs 15.3/scm due to lower gas costs and better pricing power. EBITDA was at Rs 243.8 crore, up 14% YoY, in line with our estimate of Rs 244.7 crore. On the profitability front, PAT increased 24.8% YoY to Rs 166.6 crore, in line with our estimate of Rs 168.7 crore, aided by lower tax rate.

Outlook

we believe recovery in demand (mainly commercial PNG, CNG) will take time and sales growth will be seen only from Q3FY21E. The stock price has also surged sharply since our last recommendation. We downgrade the stock from BUY to HOLD with a target price of Rs 1145/share (13x FY22E EPS).