Please refer to important disclosures at the end of this report
Mahanagar Gas Limited (MGL) is one of India's leading Natural Gas Distribution
Companies. MGL has a strong parentage and is a joint venture between GAIL
(India) Ltd and BGAPH (a subsidiary of Royal Dutch Shell Plc). MGL will supply to
households in Uran and NH4 with reputed builders, 1 CNG station will also be
started in Karjat this month. The company’s volumes have reported a 6.7%
CAGR from FY11-16 and expects volume growth to continue in the range of 5 -7
per cent. On an average, about 6,000 vehicles including private cars and three-
wheelers convert to CNG each month in and around Mumbai. The numbers
could rise sharply if taxis in Mumbai are mandated to run on CNG. MGL is also
running a pilot programme in Mumbai with CNG-run scooters. The initiative, i
successful, could open up a significant new market for the company. There is
also significant potential to expand the company’s domestic PNG network
(currently about 9.2lakh households). The price of domestic gas has come down
sharply over the past few years thanks to the formula-based pricing mandated b
the government. The cost of imported gas used to supply PNG to commercial
and industrial customers, has also come down due to weakness in international
prices. With customs duty on liquefied natural gas (LNG) cut from 5 per cent to
2.5 per cent, imported gas should get more price-competitive. The company will
maintain capex run rate of `200230cr over next couple of years inclusive of all
areas. It’s also expected that MGL will benefit from new taxi scheme which is
expected to announced by the government, introduction of 2 wheelers on CNG,
addition of new uses by BEST and low natural gas prices. The company continues
to maintain its debtfree balance sheet with robust return ratios, strong free cash
flows from operation at around `400cr+ and healthy return on equity (RoE) o
20%+ for the last 3years, the company is well positioned to capture health
demand prospects. The company has also been maintaining a healthy dividend
payout of 51.72% (Div yield: 1.77%). Hence Buy.
CMP `895
Stock Info
Bloomberg Code
Shareholding Pattern (%)
Promoters 65.0
MF / Banks / Indian Fls 18.1
FII / NRIs / OCBs 11.4
Indian Public / Others 5.5
Abs. (%) 3m 1yr 3yr
Sensex 12.3 18.4 32.9
Mahanagar Gas 8.9 N/A N/A
Note: Listed on July 1, 2016
Reuters Code N/A
BSE Sensex 29,910
Nifty 9,238
Face Value (`)
Oil & Gas
Market Cap (` cr) 8,842
52 Week High / Low 956/493
Avg. Daily Volume 92,553
Vaibhav Agrawal
022 – 3935 7800 Ext: 6808
Mahanagar Gas
Others | Oil & Gas
April 06, 2017
Mahanagar Gas | Oil & Gas
pril 06, 2017
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website:
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Disclosure of Interest Statement Mahanagar Gas
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment
: Reduce
-5% to -15%
< -15