Buy Mahanagar Gas; target of Rs 1665: Motilal Oswal

Motilal Oswal is bullish on Mahanagar Gas recommended buy rating on the stock with a target price of Rs 1665 in its research report dated March 06, 2024.

Broker Research

March 07, 2024 / 12:02 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Mahanagar Gas

MAHGL’s stock price declined over 15% on 6th Mar’24 after Mr. Hardeep Singh Puri, Minister of Petroleum and Natural Gas, said that the full benefits of gas sector reforms have not reached the end user and that CGDs are posting strong profits. He also declared the government’s commitment to ensuring the benefits of gas reforms reach end-consumers directly. The market likely believes that the recent CNG price cut by the company is driven by the minister’s statements about CGDs making high EBITDA/scm margins. We believe that the current stock price correction is partly an overreaction and partly driven by profit-booking following the strong run-up in the last six months. We believe that the current weakness is a good opportunity to buy a franchise with decent volume growth visibility at reasonable valuations. We remain positive on MAHGL and retain our BUY rating.

Outlook

We maintain our BUY rating and TP of INR1,665 per share, valuing it at 14x Dec’25E EPS. The stock currently trades at 11.7x FY25E EPS of INR114.9, and our TP implies a multiple of 14.5x FY25E EPS. We believe MAHGL’s valuations should continue to converge closer to IGL’s, given a largely similar volume growth profile and lower EV risk.

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