Jefferies has reiterated its bullish stance on Mahanagar Gas Limited (MGL), raising its target price to ₹2,120 per share, an 18% upside from the stock’s closing price of ₹1,810 on September 11. The upgrade reflects an optimistic outlook for MGL’s volume growth, bolstered by accelerating retail outlet additions and robust inter-corporate volume growth.
Despite the challenges posed by decreasing APM (Administered Pricing Mechanism) gas allocations, which represent a structural headwind for City Gas Distributors (CGDs), MGL is expected to navigate these difficulties more effectively than its peers. The company’s margin defense is notably stronger due to its lower reliance on expensive spot LNG.
Jefferies has also raised its volume growth estimate for FY25, positioning MGL as a preferred pick in the CGD sector. This positive outlook is driven by the company’s strategic advantage and operational resilience in a competitive market.
