'Hold' Mahanagar Gas Shares Maintains Nirmal Bang On Muted Risk-Reward

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Nirmal Bang Report

We maintain Hold rating on Mahanagar Gas Ltd. due to muted risk-reward following a 2.2% increase in DCF-based target price to Rs 1,459. This is after marginal cuts in FY26E/FY27E based on 2.7%/5.4% cut in Ebitda (as per the management guidance), partly offset by raised volume based on higher CNG vehicle additions in the FY25 base, and increased volume in geographical area-3 (Raigadh).

As per Mahanagar Gas’ guidance in the analyst meet the company plans to boost GA-3 volume to 0.6-0.7 mmscmd in two-three years. Our increased target price is based on heightened long-term volumes owing to faster ramp up in GA-3 and implies FY27E P/E of 10.2x vs five-year median of 10.69x.

Our estimates have built in an 18% cut in APM gas supply in FY26 and allocation of new well gas from ONGC to offset this cut.

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