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

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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

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Pursuant to SEBI inspection of books and records of Rudra, as a Stock Broker, SEBI has not issued any Administrative warning to Rudra.

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RUDRA SHARES &

STOCK BROKERS LTD.