Mahanagar Gas Q3 Results Review - Strong Performance Driven By Higher Ebitda Spreads, Volumes: Yes Securities

Yes Securities Report

Mahanagar Gas Ltd. delivered a robust Q3 FY24, exceeding expectations with a 75.2% YoY increase in Ebitda to Rs 4.5 billion and an 84.3% YoY increase in profit after tax to Rs 3.2 billion.

Strong compressed natural gas volumes with a above normal growth of 6.4% YoY and a new high across piped natural gas segments drove this performance, while Ebitda spreads were stronger but sequentially declined due to price cuts.

The volumes would continue to grow at a slower pace, but Ebitda spreads should be lower in FY25 as compared to FY24 (peak profitability) which would result in a decline in earnings.

Given the recent stock rally of ~12% in last 2 weeks, we see limited upside from current current market price and maintain an 'Add' rating on the stock with an unchanged target price of Rs 1,365/ share.

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