Motilal Oswal is bullish on Mahanagar Gas has recommended buy rating on the stock with a target price of Rs 936 in its research report dated May 22, 2018.
Motilal Oswal's research report on Mahanagar Gas
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.
Outlook
The stock trades at 16.9x FY20E EPS of INR46.8. We reduce our valuation multiple by ~10%, in line with global gas peers' valuation multiple. We value MGL at 20x FY20E EPS to arrive at a fair value of INR936/share, implying an upside 18%. Maintain Buy.
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