Buy Mahanagar Gas, target price Rs 1025: ICICI Securities

ICICI Securities has buy call on Mahanagar Gas with a target price of Rs 1025. The current market price of Mahanagar Gas Ltd. is Rs 895.15.

Mahanagar Gas Ltd., incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 8835.67 Crore) operating in Gas & Petroleum sector.

Mahanagar Gas Ltd. key Products/Revenue Segments include Gas Natural, Other Operating Revenue and Pipes & Fittings for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-09-2022, the company has reported a Standalone Total Income of Rs 1743.51 Crore, up 8.08 % from last quarter Total Income of Rs 1613.19 Crore and up 87.44 % from last year same quarter Total Income of Rs 930.16 Crore. Company has reported net profit after tax of Rs 163.97 Crore in latest quarter.


Investment Rationale
The brokerage values MGL on DCF methodology, using a WACC of 10.9%, DER of 35%, long-term EBITDA assumption of Rs9.5/scm and terminal growth rate of 1.5%. In the longer term, it builds in muted volume growth beyond FY25E as well as flattish margins, given caution around longer term growth expectations. Its DCF value delivers a target price of Rs1,025/sh, 15.4% upside from here.

Promoter/FII Holdings
Promoters held 32.5 per cent stake in the company as of 30-Jun-2022, while FIIs owned 25.81 per cent, DIIs 16.05 per cent.