MGL stock check: Shares of city gas distributor (CGD) Mahanagar Gas Ltd (MGL) have rallied 31 per cent in the last three months and outperformed the 30-share BSE Sensex by nearly 22 per cent. In the last three months, MGL has provided 19.93 per cent returns to investors against Nifty 50’s 7.44 per cent during the period. According to domestic brokerage HDFC Securities, strong volume growth will continue to drive the stock price outperformance.
On Tuesday, shares of MGL opened at ₹1,950 and hit an intra day high of ₹1,950 against a 52-week high of ₹1,988.55 before settling 1.40 per cent lower at ₹1,914.35 apiece on the BSE. The natural gas distributor commands a market capitalization of ₹18,909.52 crore and a turnover of ₹3.21 crore.
MGL Q1 Results
MGL’s net profit jumped 7.4 per cent YoY to ₹285 crore in the first quarter of fiscal 2025, compared with ₹265 crore over the same period last year. The CGD’s revenue rose 1.5 per cent to ₹1,590 compared to ₹1,567 crore in the year-ago period. The total sales volume for the quarter stood 2.1 per cent higher on a quarter-on-quarter basis at 3.859 million metric standard cubic meter per day.
MGL was incorporated in 1995 and is a natural gas distribution company. MGL is an enterprise of MahaRatna GAIL (India) Limited (Formerly Gas Authority of India Limited) and the Government of Maharashtra. MGL sources natural gas from a diversified base of suppliers for its domestic and industrial customers.
MGL rallies 31% in three months: Should you buy or sell?
Brokerage HDFC Securities has raised the target price to ₹2,320 per share from the earlier target of ₹2,090 per share based on the natural gas distributer’s higher volume growth assumptions in the medium and long term.
Valuation: At the current price, MGL is trading at 14.8x Mar-26E EPS, at a 21 per cent premium to its five-year average because of a stronger volume growth outlook. HDFC Securities reiterated its ‘BUY’ rating on MGL with a revised target price of ₹2,320 per share.
The brokerage anticipates that MGL’s robust CNG vehicle registration data, accelerated addition of retail outlets, customer additions in the industrial segment, volume growth contribution from the acquired three GAs of Unison Enviro (UEPL) and competitive CNG price vs petrol/diesel should support strong volume growth of 11 per cent CAGR over FY24-26E.