Mahanagar Gas - Q1FY22 First Cut - ICICI Direct

(CMP: Rs. 1119, MCap: Rs. 11055 crore)

Mahanagar Gas (MGL) reported its Q1FY22 results that were better than our estimates on all fronts. The topline was up 140.3% YoY to Rs. 666.9 crore better than our estimate of Rs. 635.8 crore. Sales volume came in at 2.4 mmscmd, up 115.5% YoY (Our estimate: 2.3 mmscmd). However, it de-grew 17.1% QoQ on account of travel restrictions (estimated de-growth: 19.6%). Gross margins were at Rs. 19.4/scm, ahead of our estimate of Rs. 17.7/scm and increased Rs. 3.4/scm YoY (and Rs. 1.7/scm QoQ) due to better realisation and lower gas costs. Subsequently, EBITDA at Rs. 304 crore (up 280% YoY) was higher than estimates of Rs. 257.6 crore. Reported PAT stood at Rs. 204.1 crore, up 351% YoY (our estimate: Rs. 170.8 crore).

Q1FY22 Earnings Summary

- The topline increased 140.3% YoY to Rs. 666.9 crore against our estimates of Rs. 635.8 crore. It fell 14.9% QoQ on account of lower sales volume. Realisations were higher at Rs. 30.6/scm against our estimate of Rs. 30.1/scm

- Sales volume came in at 2.4 mmscmd, an increase of 115.5% YoY, higher than estimate of 2.3 mmscmd. CNG segment reported growth of ~223% YoY (on a lower base) to 1.6 mmscmd (our estimate: 1.5 mmscmd). PNG volumes increased ~33% YoY to 0.8 mmscmd, marginally lower than our estimates as the domestic PNG growth of 9.2% YoY was lower than expected. On a QoQ basis, volumes declined 17.1% with CNG volumes declining ~23% (estimated de-growth: ~28%) whereas PNG volumes reduced by ~2% (estimated de-growth: ~1%)

- Gross margins increased Rs. 3.4/scm YoY to Rs. 19.4/scm on account of better realisation and lower gas costs. On a QoQ basis also, gross margins increased Rs. 1.7/scm. EBITDA was at Rs. 304 crore, up 280% YoY (our estimate: Rs. 257.6 crore). EBITDA/scm stood at Rs. 13.9/scm, up Rs. 6/scm YoY and Rs. 1.8/scm QoQ

- On the profitability front, PAT was up 351% YoY to Rs. 204.1 crore (our estimate: Rs. 170.8 crore)

MGL's sales volume reached near pre-Covid level in Q4FY21. However, second wave of Covid-19 impacted CNG and industrial/commercial PNG sales during Q1FY22 given statewide restrictions on movement. Sales volume is expected to grow in the current quarter (Q2FY22-TD) with resumption of economic activities. The company hiked CNG prices in the current quarter that augurs well for margins. Full recovery in demand (and further growth) will be important in near term.

Shares of Mahanagar Gas Ltd was last trading in BSE at Rs. 1165.95 as compared to the previous close of Rs. 1109.05. The total number of shares traded during the day was 122931 in over 6792 trades.

The stock hit an intraday high of Rs. 1173 and intraday low of 1118.7. The net turnover during the day was Rs. 142100295.

Source : Equity Bulls

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