Mahanagar Gas Q4 Results Review - Margin Weakness Offset By Stronger Volume Growth: Motilal Oswal

Motilal Oswal Report

Mahanagar Gas Ltd.’s Ebitda inched up 1% YoY to Rs 3.9 billion in Q4 FY24, mainly driven by a 12% YoY rise in volumes, which offset an 11% decline Ebitda/standard cubic metre to Rs 11.5. In Q4, the company completed the acquisition of Unison Enviro Pvt. Ltd..

Besides weaker Ebitda/scm margin, Q4 profitability was hit by a surge in marketing expenses and FY24 CSR expenses being booked in Q4.

I/C PNG growth was driven by high consumption among new customers. The company guarantees a 10% discount on gas prices compared to alternate fuels for the first three years to new customers in the geographical areas-3 region.

In geographical areas-2, the discount is provided only to new customers with high gas offtake. This has helped catalyze volume growth, and the management remains confident of growing this segment in double digits. 

According to the management, CNG conversion momentum remained robust at ~20,000 in Q4. Mahanagar Gas is seeing good initial response to its marketing scheme in the commercial goods vehicle segment, albeit at a low base.

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