Broker’s call: Mahanagar Gas (Buy)

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Target: INR 1306

CMP: INR 1,071.50

Mahanagar gas It recorded sales with a total volume of 303.49 million cubic meters in the fourth quarter of FY23 compared to 285.26 million cubic meters in the fourth quarter of FY22, a growth of 6.4 percent, with CNG and PNG volumes up by 5.8 percent (y-o-y). ) and 7.8 percent (YoY), respectively.

Gross Revenue (Net of Excise Tax) in the fourth quarter of FY22 was INR 231,610.48 crore as against INR 1,086.77 crore in the fourth quarter of FY22 showing an impressive growth of 48.2 per cent, with CNG business recording growth in Revenue increased by 61.9 percent (YoY) to ₹1,138.19 crore, while PNG revenue totaled ₹463.43 crores as against ₹376.59 crores in the fourth quarter of FY22.

The stock is currently trading at 11.2x FY24e EPS of $92.63 and 9.5x FY21 EPS of Rs 108.86. MGL aims to capitalize on opportunities in the CGD segment by increasing its customer base on the back of its expanding distribution network – it plans to add 30-40 stations during the year, while its PNG network will get a boost from expansion in Raigad district.

Direct bidding and formation of strategic alliances will also aid volume growth of 5.5 per cent in FY24. Overall, we maintain an adjusted price target of ₹1,306 (previous target of ₹1,012).