Mahanagar Gas Hits 52-Week High, Shares Surge 7% as Q4 Margin Improves

Shares of Mahanagar Gas soared 9% to hit a new 52-week high on the back of strong Q4 results.

Shares of Mahangar Gas (MGL) hit a 52-week high of Rs 1,072.35, surging 7% in intraday trade on Tuesday after the company’s operating profit improved sequentially in the March quarter (Q4FY23) on lower procurement costs.

The company’s EBITDA/scm beat expectations at Rs 12.8 crore on lower-than-expected gas costs. Motilal Oswal Financial Services expects EBITDA/scm of Rs 8.2.

MGL’s profit after tax (PAT) rose 104% year-on-year and 56% quarter-on-quarter to Rs 268.81 crore from Rs 131.80 crore a year earlier. Operating income rose 49% year-on-year and fell 4% quarter-on-quarter to Rs 1,771.8 crore.

The Government of India has revised the Administrative Price Mechanism (APM) gas price to cap it at $6.5/mmbtu for the next two years (from a base price of $4/mmbtu).

This further reduces procurement costs, which the company passes on to customers through lower CNG and PNG prices. In this quarter (Q1FY24-TD), LNG spot prices weakened further to around $12/mmbtu from $17/mmbtu in the previous quarter. ICICI Securities said in a report that volume growth would be key to monitor going forward.

Meanwhile, the board has recommended a final dividend of Rs 16 per share at a face value of Rs 10 (or 160%) for FY22-23 (FY23).

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