Q3FY21 Result Update - Mahanagar Gas - ICICI Direct

Mahanagar Gas' (MGL) results for Q3FY21 were in line with estimates on the profitability front. Topline declined 11.2% YoY to Rs. 727.3 crore, lower than our estimate of Rs. 746.3 crore due to lower-than-expected sales volume. Sales volume came in at 2.8 mmscmd, down 9.2% YoY (our estimate: Rs. 2.9 mmscmd). On a QoQ basis, volumes increased 33.6%. Gross margins were better than estimate of Rs. 16.5/scm and increased Rs. 3.8/scm YoY and Rs. 0.4/scm QoQ to Rs. 17.7/scm due to lower than anticipated gas costs. EBITDA at Rs. 316.7 crore (up 22.4% YoY) was slightly above our estimate of Rs. 311.5 crore. Reported PAT was at Rs. 217.2 crore, up 16.7 % YoY (our estimate: Rs. 218.7 crore).

Valuation & Outlook

The government's priority allocation of domestic gas to CGD sector has enabled MGL to access cheaper gas for CNG and domestic business segments (~85% of sales mix). MGL's strong gas pipeline infrastructure and expanding operations in Mumbai, its adjoining areas and Raigad district will enable it to capture the benefits of the large and growing market given the low penetration. We roll over valuations to FY23E and upgrade MGL from HOLD to BUY with a revised TP of Rs. 1340 (13x FY23E EPS) earlier TP: Rs. 1150.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_MGL_Q3FY21.pdf

Shares of Mahanagar Gas Ltd was last trading in BSE at Rs.1139.35 as compared to the previous close of Rs. 1163.75. The total number of shares traded during the day was 45115 in over 2577 trades.

The stock hit an intraday high of Rs. 1178.6 and intraday low of 1132.5. The net turnover during the day was Rs. 51940864.

Source : Equity Bulls

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