Purchase Mahanagar Gas with Motilal Oswal's goal of Rs 1310

 Purchase Mahanagar Gas with Motilal Oswal's goal of Rs 1310

In its research report dated October 31, 2023, Motilal Oswal expressed optimism about Mahanagar Gas and suggested buying the company, with a target price of Rs 1310.

The Mahanagar Gas study report by Motilal Oswal

Mahanagar Gas (MAHGL) disclosed that their EBITDA projection was not met. Due to a lower-than-expected EBITDA/scm of INR14.6 (approx. INR15.5), its EBITDA was INR4.8b (est. INR5.1b). In 2QFY24, volumes remained consistent at 3.6mmscmd. With consistent APM gas supply, the business reduced D-PNG pricing by INR2/scm and CNG prices by INR3/kg as of October 2, 23. The price of HPHT gas decreased from USD12.12/mmBtu to USD9.96/mmBtu on October 23. Nowadays, CNG can be purchased for about 50% less than gasoline and around 20% less than diesel. Over the next year or two, the business anticipates that I/C PNG sectors will increase more quickly than previous patterns. This is a result of the company's consumer-friendly initiatives, such doing rid of the take-or-pay condition and offering new clients who would be consuming a significant quantity of gas a discount assurance. With high per capita usage in commercial vehicle categories, the corporation is offering incentives like free fuel cards on new vehicle sales, depending on gross vehicle weight, to support long-term CNG volume development.

Prospects

At 12.4x FY25E EPS of INR111.4, the stock is trading. We arrive at our TP of INR1,310 by valuing it at 16x FY25E EPS. BUY is advised again because to its lower values.