UBS has reaffirmed its “Buy” rating on Mahanagar Gas Limited (MGL) and has substantially increased its target price to Rs 2400, up 50% from the previous target of Rs 1600. This adjustment underscores UBS’s positive outlook on MGL’s growth prospects.
The brokerage’s revised target reflects expectations of continued positive surprises in both organic and inorganic volume growth. UBS has raised its total volume projections for FY25-27 by 7-11% and increased its EBITDA per standard cubic meter (scm) estimates by 6-11%, reaching Rs 12.1-12.3/scm. These adjustments take into account MGL’s effective pricing strategies and infrastructure developments, including the expansion of its CNG fleet.
UBS highlights that MGL’s ongoing infrastructure development and its focus on expanding its CNG fleet are key drivers of future volume growth. Additionally, the brokerage notes that potential M&A opportunities are not yet reflected in the current price, suggesting further upside potential.
The upgrade in UBS’s target price aligns with the company’s strong performance outlook and the anticipated benefits from its strategic initiatives, reinforcing MGL’s investment appeal.
