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HDFC Securities Institutional Equities
The Mahanagar Gas Ltd. stock price has rallied ~31% and outperformed the Sensex by ~22% in the last three months. We expect strong volume growth to continue to drive stock price outperformance.
We anticipate that the robust CNG vehicle registration data; accelerated addition of retail outlets; customer additions in the industrial segment; volume growth contribution from the acquired three grographical areas of Unison Enviro Ltd.; and competitive CNG price vs petrol/diesel should support strong volume growth of 11% CAGR over FY24-26E.
At the current price, Mahanagar Gas is trading at 14.8 times Mar-26E EPS, at a 21% premium to its five-year average because of a stronger volume growth outlook.
We reiterate our Buy rating on Mahanagar Gas with a revised target price of Rs 2,320/share.
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