Mahanagar Gas Ltd - SELL - TP Rs.1033 - Result Update - Kotak

- MGL's Q2FY18 result is marginally lower than our expectations. PAT has increased 22% yoy but flat sequentially to Rs.1.25 bn (vs. our expectation of Rs.1.26 bn). Gross margin has decreased 1% qoq (partly base effect) to Rs.2.97 bn (+19% yoy) due to lower realization. Another important factor to monitor is EBIDTA per unit of sales. The same has decreased 7.5% qoq (partly base effect) to Rs.8.05/scm (+21% yoy).

- We expect MGL to book CNG gas volume of ~1.92 mmscmd and PNG volume of 0.83 mmscmd in FY18E. Similarly, we model CNG gas volume of ~2.0 mmscmd and PNG volume of 0.84 mmscmd in FY19E. MGL will set up 20 new CNG stations in FY18E. We expect an EPS of Rs.49.3 & cash EPS of Rs.62.8 for FY18E and an EPS of Rs.51.7 & cash EPS of Rs.66.7 for FY19E. Based on our estimates, the stock at current market price is trading at 11.8x EV/EBIDTA and 22.4x P/E on FY19E earnings. We maintain SELL recommendation on MGL with a DCF based price target of Rs.1033 (earlier Rs.1006)

Shares of Mahanagar Gas Ltd was last trading in BSE at Rs.1117 as compared to the previous close of Rs. 1116.5. The total number of shares traded during the day was 18007 in over 936 trades.

The stock hit an intraday high of Rs. 1144.2 and intraday low of 1109.7. The net turnover during the day was Rs. 20237824.

Source : Equity Bulls

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