Mahanagar Gas - Strategic Growth Driven By Infrastructure Expansion: Yes Securities

Yes Securities Report

Mahanagar Gas Ltd. is to play a key role in India’s transition into the city gas distribution segment towards cleaner energy. As per industry, the Indian government’s $67 billion investment to expand the natural gas sector by 2030 poise significant growth in CNG and domestic piped natural gas infrastructure. Allocation policies prioritize APM and high pressure/high temperature gas, ensuring cost-effective supply.

Mahanagar Gas’ strategy focuses on expanding customer reach, particularly in Raigad, with major infrastructure investments. The company aims to add three lakh D-PNG connections annually in Mumbai.

Unison Enviro Pvt.Ltd.'s network includes 56 CNG stations. The inclusion of natural gas under GST by 2025 could benefit all stakeholders. Mahanagar Gas' joint venture with Baidyanath LNG plans several LNG stations, targeting long-haul transportation.

Retrofitting initiatives and a robust capex plan support it’s growth. We maintain a Buy on the stock with a revised target price of Rs 1,730/share (from earlier Rs 1,560). The increase is on a higher PER (x) multiple revised from 13.5 times to 15 times in line with to that of Indraprastha Gas Ltd. which has a similar volume growth profile and prefer Mahanagar Gas in the CGD space.

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