Neutral Mahanagar Gas; target of Rs 1020: YES Securities

YES Securities recommended Neutral rating on Mahanagar Gas with a target price of Rs 1020 in its research report dated May 10, 2023.

Broker Research

May 12, 2023 / 16:12 IST

Neutral

26 Aug, 2025 12:21

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YES Securities' research report on Mahanagar Gas

MAHGL’s 4QFY23 reported operating profit at Rs 3.9bn (+81% YoY; +52% QoQ), stood in-line with our estimates (YES Sec: Rs 3.8bn) but above street estimates (Rs 3.0bn). The earnings growth in the quarter was led by strong margins, in-turn driven by moderation in in-put gas cost. The LNG prices experienced a sharp decline during the quarter from average of USD 33/mmbtu to USD 18/mmbtu, which helped reduced RM cost during the quarter. While FY23 was challenging due to high gas price environment, going ahead with the moderation in LNG prices, implementation of new domestic gas pricing policy and the policy for preferential allocation of HPHT gas to CGD-Priority segment, the prognosis appears better. Having said that, we believe that per unit margins continue to be a stronger driver of earnings and value for MAHGL, as the scope for strong growth in volumes is rather limited, at least in the near to mid-term.

Outlook

We revise our rating to NEUTRAL with a Mar’24 TP of Rs 1020, as we model for an earnings growth at 4% CAGR (FY23-30e). Our DCF based TP implies a target multiple of 11.9x FY24e, vs 12.5x stock is currently trading.

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