IDFC Securities - Mahanagar Gas (MGL) Mahanagar Gas Q3FY19 results (Outperformer) - Sustaining the momentum

Report

IDFC Securities

Mahanagar Gas' Q3FY19 results (Outperformer) - Sustaining the momentum

Q3FY19 highlights

Mahanagar Gas (MGL) reported in line EBITDA/PAT of Rs2.4bn/Rs1.5bn growing 19/19.6% yoy respectively, driven by higher than expected margins. 9MFY19 EBITDA/PAT of Rs6.7bn/4.1bn grew 11% yoy (9MFY18 EBITDA/PAT of Rs6bn/3.7bn).
Overall volumes of 2.96mmscmd, +8.1% yoy, in line, and well above average volume growth of 5.4% over FY14-18. CNG/Dom /Ind+Comm volumes grew 8.3/13.3/2.5% yoy to 2.2/0.4/0.4 mmscmd. 9MFY19 volumes of 806 mmscm (2.93 mmscmd) have grown by 9.8% yoy.
MGL reported record high (since listing) Gross margins of Rs13.4/scm (+1.2/scm, IDFCe Rs12.8/scm) and EBITDA margins of Rs8.8/scm (+0.8/scm, IDFCe Rs8.6/scm) leading to higher profitability. 9MFY19 gross margins/EBITDA at Rs12.7/Rs8.3 per scm (vs 9MFY18 gross margins/EBITDA of Rs12.2/Rs8.2 per scm)
Opex/unit of Rs4.8/scm, +9.4% qoq higher than Rs4.4/scm, driven by higher other opex.

Key positives: Strong margins and healthy volume growth

Key negatives: Increase in opex

Impact on financials: We revise our FY20E EPS by ~2% to factor marginally higher volumes/stronger margins revising our TP to Rs1090. We also introduce FY21E with EPS of Rs64.1/sh

Valuations & View: attractively placed

The recent outperformance to Sensex (6% last 3M) takes cognizance of the strong operational/financial performance shown by MGL over the last 6mths, but we believe more is in store. Strong demand outlook, competitiveness to alternate fuels and growing penetration of the domestic segment in the Mumbai region (MMR) to drive higher volumes, with management guidance to add 0.2mn connections p.a and increase CNG network by 35 stations in FY19E (new + upgrades) supporting the same. Also the Rs2.25/kg and Rs1.5/scm aggressive price hike in CNG/PNG in October aided margins in Q3 and is expected to benefit in Q4 as well. We estimate 12.2% CAGR in volume growth over FY18-21E, with upside risk from regulatory actions and/or higher CNG conversion rates in MMR. Additional delta can also come from any success in the upcoming 10th CGD bid round. We value MGL on DCF, delivering a price target of Rs1090/sh, 19.5% upside, Reiterate Outperformer

31/01/2019 7 EN

Underlying

Mahanagar Gas

Mahanagar Gas Limited is a city gas distribution company. The Company is engaged in the distribution of compressed natural gas (CNG) and piped natural gas (PNG) in Mumbai and its adjoining areas and in the Raigad district in the state of Maharashtra, India. It also supplies CNG for vehicles, including rickshaws, taxis and cars in Mumbai, Thane, Mira-Bhayander, Navi Mumbai. It supplies CNG to Brihanmumbai Electricity Supply and Transport/Thane Municipal Transport/Maharashtra State Road Transport Corporation/Navi Mumbai Municipal Transport (BEST/TMT/MSRTC/NMMT) buses, light commercial vehicles (LCVs)/ tempos/ trucks/private buses. It offers PNG for domestic, commercial and industrial purpose. It offers PNG for various industries, including metal, pharmaceuticals, food and beverages, printing and dyeing, oil mills, power generation and air conditioning. It also installs gas geysers. Its commercial PNG has various applications in hospitals, hotels, power, charitable trusts and industries.

See profile

INE002S01010 National Stock Exchange of India India

Provider

IDFC Securities

IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.

See profile

Other Reports on these Companies

Motilal Oswal

MOSL : MAHANAGAR GAS: Margin pressures persist; volumes at a record high

MAHANAGAR GAS: Margin pressures persist; volumes at a record high (MAHGL IN, Mkt Cap USD1b, CMP INR790, TP INR951, 20% Upside, Buy) MAHGL reported an inline earnings. Record high volumes of 3.45mmscmd (up 44% YoY and 9% QoQ) has been offset by a softer EBITDA margin at INR9.1/scm (down 35% YoY). EBITDA stood at INR2.8b (down 6% YoY, but up 33% QoQ). While sales volumes were soaring higher in 1QFY23 due to a base effect, we expect a muted growth in FY24 over FY23 due to a lack of growth opportunities. Spot LNG prices have increased to ~USD41/mmBtu in Jul’22 from USD28/mmBtu in 1QFY23. Dom...

EUR 120.00

August 8, 2022 August 8, 2022 16 EN

Motilal Oswal

MOSL: MAHANAGAR GAS (Buy)-Volume growth remains strong; margin concerns remain unanswered

(MAHGL IN, Mkt Cap USD1.3b, CMP INR997, TP INR1200, 20% Upside, Buy) Mahanagar Gas (MAHGL) reported mixed 2QFY22 results, with volumes 11% higher than our estimate at 3.1mmscmd, while EBITDA/scm was lower at INR10.5 (v/s our estimate of INR12.5 and INR13.9 in 1QFY22). Thus, EBITDA came in line (at INR3b) with our estimate. The volume recovery was strong as economic activities returned to normal, with total volumes growing further by 7-8% in Oct’21 (~3.34mmscmd). The EBITDA margin decline in 2QFY22 was due to a sharp spike in spot LNG prices. The demand for CNG went up drastically post ...

EUR 120.00

October 28, 2021 October 28, 2021 10 EN

Independent Investment Research

Monthly LMI Update Independent Investment Research

Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked. This compares to the total dividends of 5 cents per share in FY20. The Board has confirmed that, in...

August 6, 2021 August 6, 2021 10 EN

GMR Infrastructure's Q3FY20 results (Outperformer) - Air traffic growth improved at the airports; deleveraging process gains momentum

Q3FY20 result highlights Airport traffic recovered in Q3FY20 with Delhi Airport witnessing a 7% yoy growth in passenger (vs 5% decline in H1FY20) and Hyderabad Airport reporting a 9% growth in passenger traffic (vs 4.9% in H1FY20). Note that traffic was subdued in H1 because of Jet Airways shutdown of operations. GMR Infrastructure (GMR) revenues grew by 11% yoy to Rs16.7bn aided by strong non aero revenues growth of 12% and 138% yoy growth in rental revenues. EBITDA for airport business was Rs6.7bn, +28% yoy Energy Business - Warora and Kamalanga PLF for Q3FY20 was 81% (vs 75% in Q3FY1...

February 24, 2020 February 24, 2020 12 EN

Bhoomika Nair

Bhoomika Nair

Ambuja Cement's Q4CY19 results (Outperformer) - In line; cost efficiencies at play

Q4CY19 result highlights Adj PAT +54% yoy to Rs4.55bn: was above estimates on lower tax (shifted to new tax regime) while operational performance was in-line. Volume increased 6.7% yoy: to 6.54mn tons led by pickup in demand in North and East, growing ahead of industry (mkt share gains). Realisations +2.7% yoy: to Rs4795/t due to sharp price hikes across regions in 1HCY19. This was further augmented by 14% yoy growth in premium products. Hence, revenue was up 9.5% yoy to Rs31.4bn. However, on a qoq basis realisations fell by Rs198/t (-4% qoq) as prices have corrected across regions from p...

February 24, 2020 February 24, 2020 6 EN

Nitin Agarwal

Nitin Agarwal

Event update: Aurobindo Pharma (Outperformer) - Unit IV receives EIR; positive outcome

Event Unit IV has received an Establishment Inspection Report (EIR) with Voluntary Action Initiated (VAI) status by USFDA Key highlights With the receipt of this status, FDA will now start granting new ANDA approvals from this facility. Notably, in mid-November, the USFDA had conducted a surprise inspection for nearly 10 days in Unit 4, post which it had issued 14 observations. While our read of the observations suggested that most of these were primarily procedural, market has been concerned around potential escalation of the issues into an OAI which, in turn, would have impacted revenu...

February 24, 2020 February 24, 2020 4 EN

Sign-up for free to access full reports immediately

Email Address*

Choose Password* ( 6 or more characters )

Due to regulatory restrictions regarding the distribution of financial research, this report is restricted to a specific region or investor type. Get access to exclusive reports by answering the questions below.

Select your country*

Get financial insights straight to your inbox

By clicking "register" you accept the Terms and Conditions & Privacy Policy

Already on ResearchPool?

Almost there...

Are you a professional investor?

Select your country

REGISTER

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

In order to access this report please create an account.

LOGIN