Mahanagar Gas - Volume Growth Levers In Place: HDFC Securities

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HDFC Securities Institutional Equities

The Mahanagar Gas Ltd. stock price has rallied ~15% and outperformed the Sensex by ~8% in the last three months. However, despite this performance, we estimate the current market price factors only ~5% volume growth.

We anticipate the accelerated infrastructure rollout in existing and new geographical areas, the acquisition of Unison Enviro Pvt. Ltd.’s three GAs, competitive CNG price vs petrol/diesel, and robust CNG vehicle registrations data should support strong volume growth of 10.4% CAGR over FY24-26E.

Additionally, at the current price, Mahanagar Gas is trading at 13.7 times March-25E earnings per share, broadly in line with its long-term average, despite a better volume growth outlook.

We, therefore, reiterate our Buy rating on Mahanagar Gas with a revised target price of Rs 1,840/share.

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HDFC Securities Institutional Equities Mahanagar Gas - Update.pdf

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