Mahanagar Gas Q1 Results Review - Superior Margin Performance Lifted Result; Upgrading To 'Buy': Systematix

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Mahanagar Gas Ltd.'s Q1 FY24 profits were much ahead of our estimates led by superior margins. Volume was up 1% QoQ to 3.41 million metric standard cubic metre per day, in line with our estimates. Compressed natural gas volume increased 3% QoQ to 2.48 mmscmd (73% of total) while domestic piped natural gas (14% of total) and industrial/commercial (13% of total) volume declined 3% and 4% to 0.5 and 0.4 mmscmd, respectively. Gas cost declined significantly by 21% QoQ to Rs 27.2/standard cubic metre which led to the highest-ever gross margin/scm of Rs 22.2, up 20% QoQ due to lower administered price mechanism and both spot and contracted LNG prices. Further, opex/scm declined 5.4% QoQ to Rs 5.6 which led to an Ebitda/scm growth of a whopping 31% to Rs16.8, 23% higher than our estimates. The company has reiterated its 5-6% volume growth over the next couple of years while the Ebitda margin can be rationalised to ~Rs 11/scm, as prices may see a correction to attract more volumes from the commercial vehicle segment. Also, Mahanagar Gas’ tie-up with MSRTC would lead to additional 450-500 buses by December 2023 which would add to its volume by 2-3%. We raise our Ebitda/scm assumption to Rs 12.6/12.2 for FY24E/FY25E from Rs 10.4/10.5 earlier. Further, with a better margin environment with ease in gas prices and strong CNG vehicle addition, we raise our price-to-earning ratio multiple to 11 times from earlier 10 times on FY25E which gives us a new target price of Rs 1,273 from earlier 1,068. We upgrade the stock to 'Buy' from earlier 'Hold'..Click on the attachment to read the full report:.Gujarat Gas Q1 Results Review - Competition Eroding The Margins; Downgrade To 'Sell': Systematix.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Mahanagar Gas Q1 Results Review - Superior Margin Performance Lifted Result; Upgrading To 'Buy': Systematix

New CNG vehicle run-rate improved; possible price cut may dent margins but with higher volume growth.

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Mahanagar Gas Q1 Results Review - Superior Margin Performance Lifted Result; Upgrading To 'Buy': Systematix

New CNG vehicle run-rate improved; possible price cut may dent margins but with higher volume growth.

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