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MOSL: MAHANAGAR GAS (Neutral)-Threat on volumes/margin from likely lapse of marketing exclusivity

Mahanagar Gas: Threat on volumes/margin from likely lapse of marketing exclusivity

(MAHGL IN, Mkt Cap USD1.3b, CMP INR889, TP INR1007, 13% Upside, Neutral)

 

• MAHGL’s volumes were in line with our estimate at 3.01mmscmd (+7% YoY, +1% QoQ) for 4QFY19. However, higher opex led by inventory/pipeline provisions and other repairs/maintenance costs resulted in lower EBITDA/scm of INR7.9 (our estimate: INR9.2). As a result, EBITDA of INR2.1b (+21% YoY, -11% QoQ) came in lower than our estimate of INR2.5b. Consequently, PAT of INR1.3b (+27% YoY, -10% QoQ), too, came in lower than our estimate of INR1.6b.
• For FY19, EBITDA stood at INR9.2b (+18% YoY), with PAT up 21% YoY at INR5.8b. Volumes grew 9% YoY to 3mmscmd (v/s 2.7mmscmd in FY18).
• EBITDA/scm was lower at INR7.9 (v/s INR7.0 in 4QFY18; INR8.8 in 3QFY19) for the quarter; it came in at INR8.2 for FY19 (v/s INR7.9 in FY18).
• CNG volumes grew 7% YoY but were flat QoQ at 2.2mmscmd (v/s 2.05mmscmd in 4QFY18, 2.17mmscmd in 3QFY19), led by the BEST bus union strike. PNG volume growth stood at 9% YoY and 3% QoQ. PNG – domestic volumes were at 0.39mmscmd (11% YoY, flat QoQ) and PNG – industrial/commercial volumes at 0.42mmscmd (+7% YoY, +4% QoQ).