Mahanagar Gas Shares Near 18-Month High After Q4 Profit Beat

Brokerages' View

Jefferies

• Maintain a 'hold' rating with a price target of Rs. 1,100, implying a potential upside of Rs. 12%.

• Expect strong earnings in the first half of FY24 due to falling LNG prices.

• Ebitda margins were at Rs 12.8 per standard cubic metre beating the brokerage's expectations and were at a seven-quarter high.

• It believes Mahanagar Gas benefited from feedstock costs as market-linked LNG prices fell sharply during the fourth quarter while retail prices remained flat quarter-on-quarter.

• Overall volume declined for the second consecutive quarter, at a 1% decrease and 2% below Jefferies' estimates.

Investec

• Maintain a 'hold' rating with a price target of Rs. 1,100, implying a potential upside of 14.3%.

• believes the sales volume decline was driven by a 3% QoQ decrease in CNG sales.

• Says margin expansion was driven by lower LNG prices and the tie-up of HPHT gas from early February.

• An increase in prices coupled with a reduction in gas costs led to a strong margin performance relative to IGL.

• The company declared a final dividend of Rs 16 per share, totaling Rs 26 per share for FY23, implying a dividend payout of 33%, which was lower than the average of 40% during the previous three years.