7 MGL share price target reports by brokerages below. See what is analyst's view on MGL share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
We tweak our FY21/22 earnings estimate to factor in lower volumes as well as higher margins; (MGL’s five year EBIDTA CAGR at ~20% with margins growing at 14% and volumes at 5% CAGR). MGL remains an enviable business model with high pricing power given rising differences with petrol/diesel. Also, shift to private vehicle ownership post Covid pandemic to drive CNG volumes. We like MGL’s business given their dominating share in the growing markets of Mumbai and suburbs. Reiterate BUY.
The stock currently trades at 12.3x FY20e EPS of Rs EPS of Rs 61.47. MGL’s aim to capitalize on opportunities within the CGD business by increasing its customer base on back of expansion of gas distribution network. Its foray in Raigad district provides further expansion opportunities in CNG and PNG network. Yet, its infrastructure exclusivity in Mumbai and marketing exclusivity in Raigad is valid until 2020 and could make it vulnerable to the entry of new players lockdown in Maharashtra has shuttered off take few weeks. MGL’s CNG volume as a result is estimated to fall by nearly 18% this fiscal. Yet, demand may barely remain subdued post gradual lifting of the lockdown. Post tax earnings in the current fiscal decline by over 20% on dismal revenues. ‘accumulate’ rating on the stock with target price of R target Rs 1286) based on 18x FY21e EPS of Rs 61.47
We expect the APM gas prices likely will be revised downward by ~US$1/mmbtu from 1HFY21E onwards, while lower spot LNG prices will result in improvement in EBITDA/scm to Rs10 for FY21E (vs Rs 9.4 old assumption). We have revised our estimate for FY21E/FY22E in light of lower cost of gas. The stock has rallied 12% YTD, which is already factoring higher EBITDA/scm for FY21E. As it would be rather a challenge for MAHGL to sustain volume growth in the excess of 6%, we have maintained volume growth assumption at 3.5% for FY20/FY21E. Further, as the Company has not won any new GA, we do not envisage any incremental volume growth. Fall in run rate of vehicle conversion and worst car density in Mumbai (news) will lead to mere 3% CNG volume growth in FY19-FY22E. MAHGL is trading as a consumer play (FY20 P/E of 14x) despite its matured business profile. Further, we expect MAHGL’s RoCE/RoE to fall from 28%/29% in FY20E to 23%/24% in FY22E, as it is unlikely to sustain consistent growth in EBITDA and PAT over the next 3 years (FY19- FY22E). We maintain our REDUCE recommendation on the stock with an upwardly revised DCF-based Target Price of Rs1,045 (From Rs 956 earlier).
We maintain Sell rating on Mahanagar Gas (MGL) on our revised DCF-based target price (TP) of Rs856 vs. old TP of Rs823 (28% downside from CMP) post the 29% rally in the stock over the last 12 months. We have marginally cut our earnings for FY20-21E by 3.2%/3.4% after the concall. MGL reported 3QFY20 PAT at Rs1.86bn, up 25.4% YoY and a tad above NBIE estimate. Revenue was a bit lower than expected at Rs7.44bn. EBITDA was a marginal miss as the lower than expected revenue offset the 17bps beat on margin at 34.8% in 3QFY20. The YoY earnings growth was driven by: (i) expansion in gross and EBITDA margin – up 336bps and 300bps, respectively; and ii) lower effective tax rate under the new regime - which offset the 4% decline in overall realization. Volume growth was muted with CNG up 2.4% and PNG up 4.8%. Our Sell call is based on: i) the risk of PNGRB opening up MGL’s Mumbai CGD network under regulated tariffs vs. the current unregulated model; ii) the potential risk to margins in the event of higher cost of gas for the industrial/commercial segments and iii) The annual capex of Rs4bn-Rs4.5bn including renewals, could be a drag on returns over the next 2-3 years, with the growth from Raigad likely to take longer. The stock is worth Rs1,058 under our bull case, assuming MGL enjoys the current unregulated model forever, which we believe is stretched.
The government’s priority allocation of domestic gas to CGD sector has enabled MGL to access cheaper gas for CNG and domestic business segments, constituting ~85% of total sales volume. MGL’s strong gas pipeline infrastructure and expanding operations in Mumbai, its adjoining areas and Raigad district will enable the company to capture the benefits of the large and growing market given the low penetration. Given the strong margin outlook ahead and rollover in valuations to FY22E, we maintain BUY recommendation on the stock with a target price of Rs 1380.
The government’s priority allocation of domestic gas to the CGD sector has enabled MGL to access cheaper gas for the CNG and domestic business segments, constituting ~86% of total sales volume. MGL’s strong gas pipeline infrastructure and expanding operations in Mumbai, its adjoining areas and Raigad district will enable the company to capture the benefits of the large and growing market given the low penetration. The company has been able to sustain healthy margins over the last four to five years due to strong pricing power. We expect it to continue. Given the healthy margin and discount in valuation compared to its peers, we revise our P/E multiple from 14x to 16x and arrive at a target price of Rs 1230 with a BUY recommendation on the stock.
In 1HFY20, MAHGL reported total gas sales volume growth of mere 2% YoY vs. Company guidance of 6%. To perform 6% total volume growth in FY20, our calculation suggests, MAHGL need to report 10% total volume growth in 2HFY20, which is unlikely. Further, no new GA won by company, no scope of expansion and volume growth from new area. Fall in run rate of vehicle conversion and worst car density in Mumbai (news) will lead to mere 3.0% CNG volume growth in FY19-FY22E. We expect, MAHGL’s FY20E to FY22E EPS CAGR of 1% only. As we envisage fall in EBITDA margin and limited growth potential, which may warrant a de-rating and reduction in PE multiples from the current levels. MAHGL is trading as a consumer play (FY20 P/E of 14x) despite its matured business profile and EBITDA margin reduction, after rise in crude prices and crude linked gas cost. Further, we expect MAHGL’s RoCE/RoE to fall from 24%/24% in FY19 to 22%/22% in FY22E, as the Company is unlikely to sustain consistent growth in EBITDA and PAT over the next 3 years volume growth over FY19- FY22E.We downgrade our recommendation on the stock to REDUCE from HOLD with an unrevised DCF-based Target Price of Rs956.
We maintain our earnings estimate for FY20/21E. MGL remains a play on increased gas penetration from rising vehicle and PNG penetration. Wecontinue to like MGL’s business given their dominating share in the growingmarkets of Mumbai and suburbs. Reiterate BUY with a revised PT of Rs1,339 to factor in lower WACC post adjusting for risk free rate.
MGL is an excellent cash annuity model with decent dividend yield. Promoter offloading some stake has weighed down on the valuations, however, the uncertainty of around this is over by BG Asia selling off their remaining 10 pc stake (complete exit) as markets have reacted positively to the news. We structurally like MGL as there is improvement in their operational performance. MGL has lesser GA’s than its peers but theirprofitability is higher than its peers. With volume outlook looking stable and spreads likely to sustain, outlook gets better. Based on DCF valuation, we maintain our Accumulate rating with a target price of Rs 985.
We maintain BUY on MGL post an impressive performance on spreads albeit disappointing volume growth. Our TP is Rs 1,133/sh (19x Jun-21E standalone EPS). MGL did not win any new GAs in either of the recently concluded ninth or tenth rounds of CGD biddings. This factor may weigh on its long-term growth. We believe that the company will continue to enjoy pricing power and be able to maintain its per unit spread. This is because of a loyal customer base of CNG and commercial customers (who together comprise ~80% of total sales mix), that are less price sensitive than industrial customers. Moreover, we do not foresee any significant regulatory adversity in its CGD business either through a change in gas allocation or capping returns.
The government’s priority allocation of domestic gas to CGD sector has enabled MGL to access cheaper gas for CNG and domestic business segments, constituting ~85% of total sales volume. MGL’s strong gaspipeline infrastructure and expanding operations in Mumbai, its adjoining areas and Raigad district will enable MGL to capture the benefits of the large and growing market given the low penetration. In spite of decent performance, we have lowered our P/E multiple from 16x to 14x due touncertainty over regulator’s (PNGRB) decision on possible competition in existing area (Mumbai) and selling of remaining 10% stake of BG Group in MGL. We arrive at a target price of | 950 with a BUY recommendation.
Strong show led by margin expansion We maintain our earnings estimate for FY20/21E. MGL remains a play on increased gas penetration from rising vehicle and PNG penetration. Wecontinue to like MGL’s business given their dominating share in the growingmarkets of Mumbai and suburbs. Reiterate BUY.
We expect the industrial and commercial segment to revive as crude oil prices rise. With the ongoing capital expenditure, MGL is trying to increase its footprint, especially in the Raigad region. The green fuel push by the government will entail easy availability of gas supplies. The risk to our analysis is BG Asia selling its stake. Maintain Accumulate.
While the management has stated that it is open to both organic and inorganic opportunities, we await a further clarity on the MGL’s future projects. We have revised our estimates to factor in the changes in gas prices and business development in the near future. We expect the revenues to grow at a CAGR of 10.8% over FY19-21E and EBITDA to grow at a CAGR of 10.2% over FY19-21E. At a CMP of INR 854, the stock is trading at 14.8x of its FY20E earnings and at 13.2x of its FY21E earnings. We valued the company by assigning a multiple of 18x on the FY20E EPs of INR 57.6 and arrived at target price of INR 1,036 (from INR 1,146 earlier) with a potential upside of 21.3%. We maintain BUY rating on the stock.
Considering the slower volume growth, lower price realisation and impact of rising operating expense, we trim down our earnings estimates by 5% each for FY20E and FY21E. Accordingly, we cut our DCF-based Target Price to Rs803 and maintain our REDUCE recommendation. We envisage fall in EBITDA margin and limited growth potential, which may warrant a de-rating and reduction in PE multiples from the current levels. MAHGL is trading as a consumer play (FY20 P/E of 16x) despite its matured business profile. Further, we expect its RoCE/RoE to fall from 24%/24% in FY19 to 19%/20% in FY21E, as the Company is unlikely to sustain consistent growth in EBITDA and PAT over the next 2 years. Further, declining dividend payout ratio would continue to remain as one of the major concerns for the investors.
The government’s priority allocation of domestic gas to CGD sector has enabled MGL to access cheaper gas for CNG and domestic business segments, constituting ~85% of total sales volume. MGL’s strong gas pipeline infrastructure and expanding operations in Mumbai, its adjoining areas and Raigad district will enable MGL to capture the benefits of the large and growing market given the low penetration. In spite of good performance, the remaining 10% stake of BG Group in MGL will continue to limit upside on the stock for the near term. However, given the current valuation, we arrive at a target price of | 1050 (16x FY21E EPS of | 65.6) with a BUY recommendation from a year’s perspective.
We maintain our earnings estimate for FY20/21E. MGL remains a play on increased gas penetration from rising vehicle and PNG penetration. We continue to like MGL’s business given their dominating share in the growing markets of Mumbai and suburbs. Reiterate BUY.
MAHGL’s performance has been encouraging in terms of volume growth. However, its EBITDA/scm is the highest among listed players and looks unsustainable in the long term. We increase our EBITDA/scm assumption to INR8.5 for FY19, but retain our earlier assumption of INR7.9 for FY20 and INR7.8 for FY21. With 9MFY19 EPS at INR41.8, we raise our FY19 EPS estimate from INR53.7 to INR57.1. EPS estimates for FY20 and FY21 have been marginally raised. Against estimated 10% volume growth in FY19, we expect volume growth of ~9% in FY20 and FY21. We believe that the government’s focus on reducing pollution would enable better incentives for adoption of CNG in transportation as well as in industrial/commercial segments. The stock trades at 15.1x FY20E EPS of INR59.8. We value MAHGL at 20x Dec’20 EPS to arrive at a fair value of INR1,300/share, implying an upside of 41%. Maintain Buy.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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