Centrum Broking has given add rating to Mahanagar Gas with a target price of Rs 940. The share price moved up by by 0.84 per cent from its previous close of Rs 981.90. The stock’s last traded price is Rs 990.15.
Mahanagar Gas Ltd., incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 9776.53 Crore) operating in Gas & Petroleum sector.
Financials
For the quarter ended 30-06-2020, the company reported a Standalone sales of Rs 277.47 Crore, down 63.14 % from last quarter Sales of Rs 752.67 Crore and down -63.37 % from last year same quarter Sales of Rs 757.49 Crore Company has reported net profit after tax of Rs 45.25 Crore in latest quarter.
Investment Rationale
Given a weak volume performance, we trim our FY21E volumes to 2.1mmscmd (-29.8% yoy) however factor a sharp recovery in FY22E to 3.1mmscmd. The brokerage has also factored in EBITDA margins of Rs9.1/Rs9.9 per scm for FY21/22E and higher capex of Rs4-5bn (from Rs3.5- 4.5bn earlier), implying a revision in EPS by -16.7/-1.6% for FY21E/FY22E. Also, growth beyond FY23-24E remains at risk, given lack of inorganic growth opportunities and potential saturation in existing areas. The DCF valuation, factoring revised assumptions delivers a TP of Rs940/sh, implying limited upside.
Promoter/FII Holdings
Promoters held 66.8 per cent stake in the company as of June 30, 2020, while FIIs held 0.2 per cent, DIIs 8.4 per cent and public and others 24.6 per cent.
Mahanagar Gas Ltd., incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 9776.53 Crore) operating in Gas & Petroleum sector.
Financials
For the quarter ended 30-06-2020, the company reported a Standalone sales of Rs 277.47 Crore, down 63.14 % from last quarter Sales of Rs 752.67 Crore and down -63.37 % from last year same quarter Sales of Rs 757.49 Crore Company has reported net profit after tax of Rs 45.25 Crore in latest quarter.
Investment Rationale
Given a weak volume performance, we trim our FY21E volumes to 2.1mmscmd (-29.8% yoy) however factor a sharp recovery in FY22E to 3.1mmscmd. The brokerage has also factored in EBITDA margins of Rs9.1/Rs9.9 per scm for FY21/22E and higher capex of Rs4-5bn (from Rs3.5- 4.5bn earlier), implying a revision in EPS by -16.7/-1.6% for FY21E/FY22E. Also, growth beyond FY23-24E remains at risk, given lack of inorganic growth opportunities and potential saturation in existing areas. The DCF valuation, factoring revised assumptions delivers a TP of Rs940/sh, implying limited upside.
Promoter/FII Holdings
Promoters held 66.8 per cent stake in the company as of June 30, 2020, while FIIs held 0.2 per cent, DIIs 8.4 per cent and public and others 24.6 per cent.