Buy Mahanagar Gas; target of Rs 1066

Buy Mahanagar Gas; target of Rs 1066

Mahanagar Gas Limited was incorporated on 8th May 1995 with the objective of supplying natural gas as compressed natural gas (CNG) and piped natural gas (PNG) in Mumbai and the adjoining areas. The Company has blue chip shareholders GAIL (India) Ltd. (”GAIL”) (32.5%) Government of Maharashtra (“GoM”) (10.0%) Public and Other (57.5%). The Company is the Sole authorized distributor of CNG and PNG in Mumbai, its adjoining Areas and Raigad with more than 22 years track record in Mumbai. As on 31st March 2020, the Company has over 5,600 kms of pipeline. MGL supplied gas to more than 11.68 lakhs households and 4,021 industrial and commercial customers. During FY 2019-20, it converted with 105,317 domestic households and supplied piped gas to a cumulative customer base of more than 1.26 million households.

Outlook

The Company is debt free and has a strong balance sheet. We believe this Company should be part of investor’s portfolio as its business model is sound and has big opportunity to be seized. We expect an upside of 30 percent for investors with a horizon of 12 months with a target of Rs. 1,066 (12x at estimated FY22 EPS of Rs. 88.33).

Source

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