Jefferies has reiterated its Buy rating on Mahanagar Gas Ltd (MGL) with a revised target price of ₹1,740, suggesting a potential upside of approximately 15.7% from the current market price of ₹1,503.90. Jefferies has adjusted its target price due to projected volatility in feedstock costs and revised margin assumptions.
Key Insights from Jefferies’ Report
- In-Line EBITDA: MGL’s EBITDA was in line with Jefferies’ estimates, with volumes 3% above expectations and slightly lower-than-estimated EBITDA margins.
- Upgraded Volume Growth Assumptions: The brokerage raised its FY25/26 volume growth projections by 4%-7%, driven by accelerated additions in Retail Outlets (ROs).
- Impact of APM Gas Reallocation: Jefferies noted that the reallocation of Administered Pricing Mechanism (APM) gas could introduce more volatility in feedstock costs, potentially affecting volume growth.
- Revised PAT Estimates: FY25 and FY26 PAT estimates have been lowered by 9% and 13%, respectively, with a reduced multiple of 15x PE.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisors before making investment decisions.
