Mahanagar Gas Q2 Review - Volume Growth Remains Strong; Margin Concerns Remain Unanswered: Motilal Oswal
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Motilal Oswal Report
Mahanagar Gas Ltd. reported mixed Q2 FY22 results, with volumes 11% higher than our estimate at 3.1 million metric standard cubic meter per day, while Ebitda/standard cubic meter was lower at Rs 10.5. Thus, Ebitda came in line with our estimate.
The volume recovery was strong as economic activities returned to normal, with total volumes growing further by 7-8% in October 2021 (~3.34mmscmd).
The Ebitda margin decline in Q2 FY22 was due to a sharp spike in spot liquefied natural gas prices.
The demand for compressed natural gas went up drastically post the easing of the second Covid-19 lockdown, due to which Mahanagar Gas had to use spot LNG for ~5% of priority gas volumes.
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