Mahanagar Gas Q3 Results Review - Recent Run-Up Limits Upside; Downgrade To 'Hold': Systematix

NDTV Profit’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 NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Mahanagar Gas Ltd. Q3 FY24 results were below our estimates but above consensus estimates. Mahanagar Gas reported the highest-ever volume of 3.67 million metric standard cubic metre per day, up 7.6% YoY (+2.7% QoQ) led by 1.9%/8% growth in CNG/DPNG, respectively. Ebitda though declined 6.3% QoQ to Rs 4.5 billion owing to lower gross margin/standard cubic metre which contracted 6.4% QoQ (+40% YoY) to Rs 19.0. Mahanagar Gas added 0.12 million DPNG connections, one CNG station, 98 IPNG customers, and, about 100 new MSRTC buses during the quarter. Further, Mahanagar Gas managed to add a few large IPNG customers by offering some discounts, which is expected to boost volume. The company is looking to add 400-500 MSRTC buses, 40-45 CNG stations during FY24 with a total estimated capex of nearly Rs 7.5 billion and reaching Rs 10 billion in FY25E. New CNG vehicle addition keeps the rising trend and added 22,400 vehicles during the quarter versus 21,000 vehicles in Q2 and 18,000 in Q1. We raise our volume and Ebitda forecasts by 1%/2% and 16%/12% for FY24E/FY25E on the back of strong CNG vehicle addition and a sharp fall in spot LNG price. We introduce FY26E and forecast volume/Ebitda/profit after tax growth of 5.6%/4.7%/4.7% YoY in FY26E. We roll over our target price to FY26E and arrive at a new target price of Rs1,500 from earlier Rs 1,273 based on the unchanged multiple of 11 times on FY26E. However, the valuation has seen a sharp increase of 32% since our last note on October 31, 2023 and offers 11% upside from our target price. Therefore, we downgrade the stock to 'Hold' from earlier 'Buy'. Key risks: Change in government policies, change in alternate fuel prices, volatility in spot LNG price etc..Click on the attachment to read the full report:.Mahanagar Gas - Robust Volume Growth Outlook: HDFC Securities.DISCLAIMERThis report is authored by an external party. NDTV Profit 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 NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Mahanagar Gas Q3 Results Review - Recent Run-Up Limits Upside; Downgrade To 'Hold': Systematix

Rise in CNG vehicle adoption to drive volume growth

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