Mahanagar Gas - Volume Growth Picking Up, Maintain Buy: HDFC Securities

HDFC Securities Institutional Equities

The Mahanagar Gas Ltd. stock price has rallied ~43% and outperformed the Sensex by ~34% 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 infrastructure rollout in existing geographical areas, volume growth contribution from the acquired three GAs of Unison Enviro Pvt. Ltd. and competitive CNG price versus petrol/diesel will support strong volume growth of 10.4% CAGR over FY24-26E.

At the current price, Mahanagar Gas is trading at 14.1 times Mar-26E earnings per share, at a 15% 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 2,090/share.

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