PSU Natural Gas Company Cuts CNG Prices; Should You Buy Its Stock Price?

One of the leading natural gas suppliers in India, Mahanagar Gas has trimmed the prices of CNG that are widely used across the country. There was no change made in PNG prices. Following the price hikes, many brokerages have recommended buying MGL shares on BSE and NSE.

As per the statement, MGL reduced the price of its compressed natural gas (CNG) by Rs 2.5 per kg. Now, 1 kg of CNG is valued at Rs Rs 73.50 from earlier Rs 76. This has come into effect from March 5, 2024. The reason behind the cut in CNG prices was due to a correction in gas input costs.

Further, in the statement, MGL said that CNG price is now offering about 53% savings against petrol, and about 22% against diesel on the current price level in financial capital.

MGL believes that the reduction in CNG price would strengthen consumption of natural gas in the transportation segment -- which is a step in making the country's greener and cleaner agenda for the economy.

On BSE, at the time of writing, MGL's share price traded at Rs 1,316.95 apiece, down by 0.94% with a market cap of Rs 13,008.54 crore. The stock's 52-week high and low is at Rs 1,579 and Rs 909.10 apiece respectively.

Mahanagar Gas Share Price Recommendation:

The latest to like MGL shares is Nuvama who has maintained buy with a positive outlook. Nuvama has set a target price of Rs 1,601 apiece on MGL.

However, on the previous day, Citi downgraded MGL to Sell for a target price of Rs target price at Rs 1405 per share. The outlook is neutral.

Recently, MGL entered into a shareholders agreement with 3EV Industries ("3ev"), Founders, Promoters and other Shareholders of 3ev, to acquire 30.97% shareholding in 3ev.

Under the agreement, MGL has the right to appoint 1 Director on the Board of 3ev and 1 Board observer. MGL has the right to subscribe 30.97% of the share capital of 3ev and has the right to subscribe shares on a pro-rata basis for every further issue of shares. Prior written consent of MGL is required for Affirmative Vote Matters which, inter alia, includes matters related to the change in the capital structure of the Company.

Mahanagar Gas Limited, (MGL) one of India's leading Natural Gas Distribution Companies was incorporated on 8th May 1995. GAIL (India) Limited (Maharatna Company of Govt. of India) is the promoter of MGL.

MGL is among dividend paying stocks. Last month, the company turned ex-dividend for its interim dividend of Rs 12 per share having face value of Rs. 10/- each (i.e. 120%) for the Financial Year 2023-2024.

In Q3FY24, MGL reported revenue from operations of Rs 1,723.77 crore, down from Rs 1,838.44 crore in Q3FY23, and Rs 1,728.94 crore in Q2FY24. Net profit stood at Rs 317.18 crore in the third quarter of FY24, rising massively from Rs 172.07 crore in Q3FY23, however, down from Rs 338.50 crore in Q2FY24.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.