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MOSL: MAHANAGAR GAS (Buy)-EBITDA below estimate-CNG/PNG volumes up 7% YoY

Mahanagar Gas: EBITDA below estimate; CNG/PNG volumes up 7% YoY

(MAHGL IN, Mkt Cap USD1.4b, CMP INR790, TP INR936, 18% Upside, Buy)

 

• MGL's EBITDA of INR1.8b (+8% YoY, -12% QoQ) was below our estimate of INR2b, led by higher cost. EBITDA/scm stood at INR7.0 (est. of INR8.0; INR8.0 in 3QFY18, INR6.9 in 4QFY17). The company provided INR79m for Gujarat VAT adjustment with effect from Aug'18. It also provided INR37m for adjustment on account of GST. Adjusting for this, EBIDTA/scm stood at INR7.3. PBT rose 6% YoY (-15% QoQ) to INR1.6b (est. of INR1.9b). PAT stood at INR1.05b (est. of INR1.3b; +5% YoY, -16% QoQ).
• CNG/PNG volumes grow 7% YoY: CNG volumes grew 7% YoY (+2% QoQ) to 2.05mmscmd, while PNG volumes rose 7% YoY (+1% QoQ) to 0.74mmscmd. While PNG domestic volumes grew 9% YoY (+3% QoQ) to 0.35mmscmd, PNG industrial/commercial volumes rose 5% YoY (-1% QoQ) to 0.39mmscmd. Total volumes grew 7% YoY (+2% QoQ) to 2.80mmscmd.
• For FY18, EBITDA grew 21% YoY to INR7.8b and PAT rose 31% YoY to INR5.2b. For the year, volumes grew 5% YoY to 2.7mmscmd, while CNG/PNG volumes grew 4%/7%. EBITDA/scm was at INR7.9 v/s INR6.9/scm in FY17.