Ventura Securities Bullish On Gas Distribution Stock, Sees 74% Strong Upside, Buy

Ventura Securities places a "Buy" rating on Mahanagar Gas Ltd. with a target price of Rs 1,719/share. The brokerage sees robust gains of up to 74% if the stock is purchased at the current market price. Mahanagar Gas is a midcap Gas Distribution company. It has a market capitalisation of Rs 9,795.30 crore.

On Friday, Mahanagar Gas announced a reduction in the retail price of CNG by Rs 8/kg and domestic PNG by Rs 5/SCM.

Stock Performance, Current Market Price, 52 Week Low/High, Returns

The last traded share price of Rs 991.65/share, down 0.07% from the previous close. The performance of the stock over the past 5 years is positive.

It gave 7.68% positive return in 1 week, and 14.32% in the past 3 months, respectively. It has given 19.11% positive return in the past 1 year. It has given 10.37% positive return in 3 years. In the past 5 years, it has given 8.75% positive return.

On 10 April 2023, the stock recorded the new 52 week high at Rs 1,024.50/share, while it recorded the 52 week low on 20 June 2022 at Rs 665.80/share.

Inflection in growth trajectory, Buy for a target price of Rs 1,719/share

According to Ventura, In addition to the cool-off in the Natural Gas (NG) prices (from a peak of $9.71/mmbtu (Sept 22) to the current $2.05/mmbtu), downward NG price revision by the government based on Kirit Parik committee recommendation has created a favourable environment for demand growth.

"We expect MGL to report an NG 4 year CAGR volume of 7% to 1,528 million SCM. Taking into consideration a benign price environment and lower forecasted EBITDA per SCM (~ INR 8 per SCM, lower range of last 5 years), we expect a 4-year CAGR Revenue/EBITDA/PAT of 20%/7%/6% to INR 7,269/1,225/706 crores over the period FY22-26," the brokerage has said.

It added, "We value the stock at Rs. 1,719 based on the DCF methodology representing a potential upside of 74% from the CMP of Rs. 990 over the next 24 months. We believe that at the current price there is significant upside potential with reasonable margin of safety. The current dividend yield of 2.8% is an additional sweetener."

Disclaimer - The stock has been picked from the brokerage report of Ventura Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.