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CMP 890 972
Price ` 890
Target Price 972
Upside 9%
Div Yield 2.13%
Sensex 36106.50
Nifty 10821.60
Group/Index A / S&P BSE 500
M.cap (` in cr) 8791
Equity (` In cr) 98.78
52 wk H/L ` 1132.50/757.00
Face Value ` 10.00
NSE code MGL
BSE code 539957
IN ` Crores
Particulars Q2 FY 19 Q2 FY 18 % Change
Revenue(Gross) 762.94 588.04 29.74
EBITDA 239.63 214.15 11.90
PBT 208.72 188.30 10.84
PAT 136.29 124.79 9.22
EPS 13.80 12.63 9.22
IN ` Crores
Particulars 30.09.2018 30.09.2017 % Change
Revenue(Gross) 1439.21 1170.89 22.92
EBITDA 465.91 429.23 8.55
PBT 405.43 378.74 7.05
PAT 264.62 249.12 6.22
EPS 26.79 25.22 6.22
RUDRA SHARES &
STOCK BROKERS LTD.
POSITIONAL CALL - MAHANAGAR GAS LTD
BUY Investment Rationale
Dated : 10 th January 2019
TARGET
Being one of the largest CGD company in India and a sole aurthorized distributor of CNG & PNG in Mumbai with a strong
base of ~0.65mn CNG customers, the company is best placed to harness the growing demand for cleaner fuel.
Key Financial Highlights - Q2FY19Q2FY19 have seen a growth of 9.5% driven majorly by strong volume growth in CGD segment. Adverse Rupee Dollar exchange rate, increase
in RLNG prices and increase in APM gas price affected the gross margin stood at 48.6% as against 55.4% previous year. EBITDA margin at
31.8% in the current quarter as compared to 37.5% in the corresponding quarter of the previous year. Net profit after tax grew by 9.2% from
` 124.79 Crores in the corresponding quarter of previous year to ` 136.29 Crores in the current year. CNG sales volume grew by 9.2%,
Domestic sales volume grew by 10.1% while the industrial and commercial sector sales grew by 10.3%.
During this quarter, MGL connect to more than 26,000 domestic households and added over 88 industrial and commercial consumers, thus
having over 3,710 industrial and commercial customers. It has more than 1.1 million connected household customers. Currently, is operating
221 CNG stations, supplying CNG to more than 650,000 vehicles and aggregate of steel and PE pipeline network at 5,130 kilometers. To
cater the growing demand of cleaner fuels, MGL is expanding its CGD network in the existing areas of operation. Connectedness been
entrenched to supply gas to about 3,000 domestic PNG consumers in Uran. Gas supply to 6 to 7 major towns like Pen, Ulve, Karjat etc. is
outlined through the virtual pipeline network, besides is expanding operations in Mumbai to arrest the massive growing market.
MGL plans to add 25-30 CNG stations over the next five years to the existing gas supply infrastructure of 427 km of steel pipeline, 4615 km of
polyethylene (PE) pipeline and an exclusive network of 230 CNG stations. Majority of MGL’s capital expenditure will be allotted to the
adjoining areas of Mumbai to further strengthen the infrastructure network in underpenetrated areas. The swift pace of change in these
suburban areas has the potential to catapult MGL to a further higher trajectory of growth. Moreover, regulatory approvals, lead-time in
allocation of domestic natural gas and need for large investments to establish CGD network would remain a challenge for any new entrants.
Stock Details
The government’s priority allocation of domestic gas has enabled MGL to access cheaper gas for CNG and domestic business segments,
constituting 86 per cent of total sales volume . High spreads between CNG and other competing fuels, mainly petrol and diesel, have led to
favorable economics in the usage of natural gas as CNG and PNG by price for sensitive customers. With respect to PNG, there is some
difference between prices of comparable subsidised LPG cylinders and domestic PNG. However, convenience, safety and hassle-free supply of
domestic PNG outweigh the tediousness of LPG cylinders, which will drive the growth of domestic PNG volumes in future. Also, the cap on
maximum subsided LPG cylinders to 12 per annum and nil subsidy for salaried individuals above Rs 12 lakh bode well for domestic PNG
growth. Commercial PNG prices are cheaper by 50% than unsubsidised cylinders, leading to economics in favour of PNG usage.
A favorable policy framework in terms of CGD footprint expansion, mission PNG, smart cities, green corridors, etc., ninth round of CGD
bidding offering 86 new geographical areas in 174 districts witnessed very enthusiastic participation amongst industry players,
announcement of tenth round of CGD bidding for 50 new GAs covering 124 districts. Plans by The NITI Aayog, for additional gas pipeline
network of over 10000 kilometers and increase the coverage of City Gas Distribution and CNG network to about 326 cities and towns by
2022 to maximize the reach of natural gas across the country. With strong balance sheet, debt free, sound cash flows & return ratios, MGL
is well poised to grab the market share currently having 16% in its bucket. Cost control on the back of falling gas prices and a smart
recovery in the value of the rupee would also benefit MGL
Results Update
Half Year Highlights
RUDRA SHARES &
STOCK BROKERS LTD.
Share price Chart has been taken for a period of past 1year. There is a strong support at the levels of ` 773&
resistance of ` 980 in medium term.
Disclosures :
1) Business Activity :
2) Disciplinary History :
3) Terms & Conditions of issuance of Research Report:
4)
Sr. No. Yes/No
a) No
b) No
c) No
5)
Sr. No. Yes/No
a) No
b) No
c) No
6) Other Disclosures:
Sr. No.
a) No
b) No
c) No
Disclosures & Disclaimers
Rudra Shares & Stock Brokers Limited is engaged in the business of providing broking services & distribution of various financial products. RUDRA is also
registered as a Research Analyst under SEBI(Research Analyst) Regulations, 2014. SEBI Reg. No. INH100002524.
Rudra or its research analysts, or his/her relative or associate has any direct or indirect financial interest in the subject company.
RUDRA SHARES &
STOCK BROKERS LTD.
Disclosures
There has been no instance of any Disciplinary action, penalty etc. levied/passed by any regulation/administrative agencies against RUDRA and its Directors.
Pursuant to SEBI inspection of books and records of Rudra, as a Stock Broker, SEBI has not issued any Administrative warning to Rudra.
Disclosures with regard to receipt of compensation :
Rudra or its research analysts, or his/her relative or associates have actual/beneficial ownership of one per cent or more
securities of the subject company.
Rudra or its research analysts, or his/her relative or associate has any other material conflict of interest at time of publication of
the research report.
Disclosures
The Research report is issued to the registered clients. The Research Report is based on the facts, figures and information that are considered true, correct and
reliable. The information is obtained from publicly available media or other sources believed to be reliable. The report is prepared solely for informational
purpose and does not constitute an offer document or solicitation to buy or sell or subscribe for securities or other financial instruments for clients.
Disclosures with regard to ownership and material conflicts of interest :
Rudra or its associates have received any compensation from the subject company in the past twelve months.
Rudra or its associates have managed or co-managed public offering of securities for the subject in the past twelve months.
Rudra or its research analyst has been engaged in market making activity for the subject company.
Rudra or its or associates have received any compensation from the subject company in the past twelve months.
Rudra or its associates have received any compensation or other benefits from the subject company or third party in connection
with the research report .
Disclosures
The research analyst has served as an officer,director,employee of the subject company.
Subject to the restrictions mentioned in above paragraph, we and our affiliates, officers, directors, employees and their relative may: (a) from time to time, have long or short positions acting as
a principal in, and buy or sell the securities or derivatives thereof, of Company mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or
profits.
This Research Report (hereinafter called report) has been prepared and presented by RUDRA SHARES & STOCK BROKERS LIMITED, which does not constitute any offer or advice to sell or
does solicitation to buy any securities. The information presented in this report, are for the intended recipients only. Further, the intended recipients are advised to exercise restraint in placing
any dependence on this report, as the sender, Rudra Shares & Stock Brokers Limited, neither guarantees the accuracy of any information contained herein nor assumes any responsibility in
relation to losses arising from the errors of fact, opinion or the dependence placed on the same.
Disclaimers:
We hereby declare, that the information herein may change any time due to the volatile market conditions, therefore, it is advised to use own discretion and judgment while entering into any
transactions, whatsoever.
Despite the information in this document has been previewed on the basis of publicly available information, internal data , personal views of the research analyst(s)and other reliable sources,
believed to be true, we do not represent it as accurate, complete or exhaustive. It should not be relied on as such, as this document is for general guidance only. Besides this, the research
analyst(s) are bound by stringent internal regulations and legal and statutory requirements of the Securities and Exchange Board of India( SEBI) and the analysts' compensation was, is, or will
be not directly or indirectly related with the other companies and/or entities of Rudra Shares & Stock Brokers Ltd and have no bearing whatsoever on any recommendation, that they have
given in the research report. Rudra Shares & Stock Brokers Ltd or any of its affiliates/group companies shall not be in any way responsible for any such loss or damage that may arise to any
person from any inadvertent error in the information contained in this report. Rudra Shares & Stock Brokers Ltd has not independently verified all the information, which has been obtained by
the company for analysis purpose, from publicly available media or other sources believed to be reliable. Accordingly, we neither testify nor make any representation or warranty, express or
implied, of the accuracy, contents or data contained within this document. Rudra Share & Stock Brokers Ltd and its affiliates are engaged in investment advisory, stock broking, retail & HNI
and other financial services. Details of affiliates are available on our website i.e. www.rudrashares.com.
Individuals employed as research analyst by Rudra Shares & Stock Brokers Ltd or their associates are not allowed to deal or trade in securities, within thirty days before and five days after the
publication of a research report as prescribed under SEBI Research Analyst Regulations.
RUDRA SHARES &
STOCK BROKERS LTD.
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