The shares of the natural gas distribution company rose up to 1 percent after a well-known brokerage suggested a ‘buy’ recommendation.
With a market capitalization of Rs 12,998.66 crore, the shares of Mahanagar Gas Ltd closed at Rs 1,315.95 per share, decreased around 1.01 percent as compared to the previous closing of Rs 1,329.40 apiece.
Looking into Mahanagar Gas’s performance, revenue decreased by 6 percent from Rs 1,671 crore in Q3FY23 to Rs 1,569 crore in Q3 FY24. During the same period, net profit increased by 84 percent, from Rs 172 crore to Rs 317 crore.
Government of Maharashtra holds 98.77 lakh equity shares which is equivalent to 10 percent of the company, as of December 2023.
Motilal Oswal, one of the well-known brokerages in India, gave a ‘Buy’ call on the PSU stock with a target price of Rs 1,665 apiece indicating a potential upside of 27 percent from Thursday’s closing price of Rs 579.75 per share.
Here’s the rationale for the potential upward target:
● Brokerage anticipates a 4% CAGR in volume from FY23-26, led by measures such as cooperating with OEMs to convert commercial CNG vehicles and offering guaranteed price savings to new I/C-PNG clients.
● Motilal Oswal expects an EBITDA margin of Rs12.5/scm in FY25/FY26, down from Rs13.3/scm in 3QFY24. The brokerage does not anticipate a big profit decline for the firm. Lower spot LNG prices, from an average of USD15.8/mmBtu in 3QFY24 to Rs 8.3/mmBtu now, are expected to boost profitability in 4QFY24.
● As per Brokerage, The market believes the company’s recent CNG price decrease is due to the minister’s comments about CGDs having strong EBITDA/scm margins.
● Motilal, a Brokerage believes that if oil prices continue over USD 80/bbl, the government may encourage CGD players to expand their network, including building new stations and expanding pipeline connectivity.
The firm delivered CNG to 0.95 million cars and PNG connections to over 2.25 million residential households via over 6,652 kilometers of pipeline with infrastructural exclusivity and 319 CNG filling stations.
Mahanagar Gas Ltd is in the business of City gas distribution (CGD), and it now supplies natural gas in Mumbai, its surrounding suburbs, and the Raigad District in Maharashtra.
Written by:- Abhishek Singh
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