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ICICI Securities Report
Maharashtra State Road Transport's plan to add ~800 new buses, higher conversion run rates of compressed natural gas and stronger price competitiveness versus alternate fuels should drive stronger volume growth going forward.
We factor in 5–6% volume growth for Mahanagar Gas Ltd. over the medium term.
We see some moderation in margins over the next two-three years, and estimate Ebitda/standard cubic metre of Rs 14.7/13.4/12.7 for FY24/25/26.
At its current market price, Mahanagar Gas trades at 9.9 times FY25E and 9.7 times FY26E earnings per share, which is at a steep discount to peers.
The current correction provides an attractive opportunity to enter the stock, with our target price of Rs 1,545, implying an 17% upside.
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