Mahanagar Gas Ltd Share Price – NSE  /  BSE

Gas Distribution, Small Cap

The brokerage also lowered the price target on the stock from Rs 1,480 to Rs 1,405, expressing concerns about regulatory risks to MGL's margins and initiating a negative catalyst watch on the stock. The downgrade was motivated by India's oil minister Hardeep Singh Puri's recent statements indicating a potential for drastic measures to ensure consumer benefits in the gas industry, despite opposition from the industry. The broker is particularly worried about this leading to renewed concerns about exclusivity and margins, with MGL's margin being seen as more susceptible due to the premium it enjoys.

Additionally, MGL on Tuesday evening, cut prices of Compressed Natural Gas (CNG) by Rs 2.5 per kilogram in and around Mumbai, citing a reduction in natural gas prices. The revised MRP of CNG, effective Wednesday, will be Rs 73.5 per kilogram.

Mahanagar Gas is in the business of City Gas Distribution (CGD), presently distribution of natural gas for domestic industrial, commercial customers and CNG vehicles.

The company reported 84.33% jump in consolidated net profit to Rs 317.18 crore on a 6.1% fall in revenue from operations to Rs 1,568.76 crore in Q3 FY24 over Q3 FY23.

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Mahanagar Gas has entered into Shareholders' Agreement (SHA) with 3EV Industries (3ev), Founders, Promoters and other Shareholders of 3ev, to acquire 30.97% shareholding in 3ev for a total consideration of Rs 96 crore.

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The agreement has been entered for acquiring 30.97% shareholding and voting rights in 3ev through equity instruments

The company has the right to appoint 1 director on the board of 3ev and 1 board observer. The company has right to subscribe shares on pro-rata basis for every further issue of shares. Prior written consent of the company is required for affirmative vote matters which, inter alia, includes matter related to change in capital structure of 3ev.

The company will issue 18,343 equity instruments (10 equity shares of face value of Rs 10 each and 18,333 Series A CCPS of face value of Rs 100 each), for a total consideration of Rs 96 crore. The said equity instruments will be issued in tranches as per terms and conditions of the shareholders agreement (SHA).

Mahanagar Gas is in the business of City Gas Distribution (“CGD”), presently supplying Natural Gas.

The company reported 84.33% jump in consolidated net profit to Rs 317.18 crore despite of 6.1% fall in revenue from operations to Rs 1,568.76 crore in Q3 FY24 over Q3 FY23.

The scrip rose 0.79% to Rs 1,516.50 on the BSE.

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Further, in accordance with the arrangement with lenders of UEPL, the company has provided corporate guarantee to the lenders of UEPL to assure the due performance and compliance of terms of borrowings by UEPL. The borrowings include a Rupee term loan facility for an aggregate principal amount not exceeding Rs 543 crore and a working capital facility for an aggregate principal amount not exceeding Rs 23 crore.

Prior to the acquisition, Ashoka Buildcon (ABL) and an investment fund managed by Morgan Stanley India Infrastructure (MSII) held equity in UEPL.

The acquisition was completed on 1 February 2024, subsequent to the receipt of approval from Petroleum and Natural Gas Regulatory Board (PNGRB) on 13 December 2023.

UEPL has been granted authorisation by the PNGRB to develop a city gas distribution business in Ratnagiri, Latur and Osmanabad in Maharashtra, and Chitradurga and Davangere in Karnataka. It is engaged in supplying natural gas to the domestic, commercial, industrial and transport sectors.

Ashu Shinghal, managing director, Mahanagar Gas, said: Unison Enviro is our first acquisition. It is a momentous occasion for MGL, marking a significant milestone in our corporate history. The acquisition of UEPL aligns with our commitment towards realising our long-term growth plans.

It will not only help expand our core business of city gas distribution but will also help UEPL in ensuring a higher growth trajectory by leveraging deep domain knowledge, optimisation of cost structure through possible integration and synergies.”

In addition to this acquisition, MGL has further diversified its energy portfolio with the establishment of Mahanagar LNG. MGL is also working with Brihanmumbai Municipal Corporation (BMC) to set up one of the largest biogas plants based on Municipal Solid Waste in Mumbai.

Hydrogen, EV, renewables are adjacent areas for MGL to expand its energy portfolio for which the company is actively engaged in exploring opportunities to fuel its growth,” the company said in a statement.

Mahanagar Gas has established a firm presence in the Greater Mumbai gas distribution business, where it is the dominant player. Its growth is primarily driven by the CNG business, which contributes 70-75% of its revenues at present. The company also supplies piped natural gas (PNG) to industrial, commercial, and residential segments. The company sources most of its gas requirements from GAIL, while a small part is bought from the spot market.

The company reported 84% jump in net profit to Rs 317.18 crore in Q3 FY24 from Rs 172.07 crore in Q3 FY23. Net revenue from operations declined by 6% year-over-year (YoY) to Rs 1,568.76 crore during the period under review.

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