Shares of Mahanagar Gas Limited rose by as much as 12.1 percent to Rs 882.10 each on Tuesday after various media reports citing sources said that BG Asia Pacific Holdings is seeking to sell its 10 percent stake in the natural gas distributor.

BG, a unit of Royal Dutch Shell Plc, is seeking Rs 724 crore from the stake sale, a Bloomberg report said. It further said that BG was offering 98.8 lakh shares at a floor price of Rs 733.1, which is at a discount of 6.9 percent to Mahanagar Gas' previous day close of Rs 787 apiece.

When the Mumbai-based city gas distribution company was listed in July 2016, Royal Dutch Shell Plc, through its wholly-owned subsidiary BG Asia Pacific Holdings gained 34 percent stake in the company. 24 percent of the shareholding was offloaded in 2018 through two open market bulk deals of 8.5 percent in April and 14 percent in August, reducing its stake to 10 percent.

Shell acquired BG Group Plc in February 2016.

A Mint report said that Shell was looking to sell its stake in Mahanagar Gas to be able to focus on other businesses in India. It, however, couldn't do so until July 2019, as the SEBI rules requires a promoter to maintain the stipulated minimum promoter's contribution of 10 percent for upto 3 years from date of allotment of the issue.

Mahanagar Gas has been jointly owned by GAIL (India) Limited, Government of Maharashtra and BG Asia Pacific Holdings Pte. Limited .

Analysts at Jefferies India see this as a positive effect for the stock."One of the reasons why the stock has under-performed is the overhang of Shell potentially selling the remaining 10% stake in the company but with the overhang to be removed now, it could be positive for the stock," it said.

"We do not foresee the exit of Shell to have any negative fundamental impact on MGL since they have been in the business for more than 20 years and it is more process driven from here on," the brokerage added.