Mahanagar Gas Q2 Results Review - Volumes Stay Resilient, Margins Likely To Improve: ICICI Securities
Aggressive price increases taken post Q2 FY23 and a softening of crude and spot LNG prices should help alleviate margins.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
Mahanagar Gas Ltd. reported its Q2 FY23 Ebitda at Rs 2.53 billion (down 16% YoY, 11.5% QoQ) versus our estimate of Rs 3.1 billion. Adjusted profit after tax dipped 19.7% YoY (down 11.5% QoQ) to Rs 1.64 billion (our estimate: Rs 2 billion).
The miss was due to weaker than estimated margins even as volumes were broadly in-line. Management has attributed the dip to continued pressures of higher spot liquefied natural gas costs and higher opex.
Mahanagar Gas' gross margin/standard cubic metre and Ebitda/scm were down 16% and 24% YoY, owing to sharply higher gas costs, even as net realisations grew by a strong 70.6% YoY.
Aggressive price increases taken post Q2 FY23 and a softening of crude and spot LNG prices should help alleviate margins, while volumes remain resilient (so far) to higher end-user prices.
This should help sustain margins at Rs 13.8/scm (gross) and Rs 8.6/scm (Ebitda) for FY23E-FY24E, despite the spectre of rising LNG and pooled gas costs.
Click on the attachment to read the full report:
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.