Mahanagar Gas At Over One-Month High On Analysts' Bullish Valuation, Volume Growth
Motilal Oswal prefers the stock over Indraprastha Gas owing to its 30% cheaper valuation, broadly similar growth profile in the medium term, and relatively lower EV risk.
Shares of Mahanagar Gas Ltd. hit their highest level in over a month on Monday after several brokerages believed the valuation to be cheap amid expectations of a surge in volume growth.
Motilal Oswal maintained a 'buy' rating for the stock with a price target of Rs 1,565 apiece, as it preferred the stock over Indraprastha Gas Ltd. owing to its 30% cheaper valuation, broadly similar growth profile in the medium term, and relatively lower EV risk.
Emkay also maintained a 'buy' rating on the stock with a target price of Rs 1,680 apiece. The brokerage expects the company to see some margin downtick to spur volume growth, but margin superiority as opposed to its peers could sustain operating efficiencies, high population density, and so on.
The company's management reiterated in its analyst call its target for an overall 6-7% volume growth, with at least 10% volume growth from the recently acquired Unison Enviro Pvt. The current APM gas allocation stands at around 70%, and additional high-pressure, high-temperature volumes are compensating for the shortfall. The company also guided for Rs 1,000 crore in capex for FY25, of which Rs 200 crore will go to the UEPL.
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Shares of the company rose as much as 6.51% to Rs 1,471 apiece, the highest level since May 3. It pared gains to trade 1.88% higher at Rs 1,409 apiece as of 10:06 a.m. This compares to a 0.10% decline in the NSE Nifty 50 Index.
The stock has gained nearly 12% in its four-day rally.
The stock has risen 17.5% on a year-to-date basis and 34.6% in the last twelve months. Total traded volume so far in the day stood at two times its 30-day average. The relative strength index was at 58.69.
