Mahanagar Gas hikes CNG rates in Mumbai; stock gains
Mahanagar Gas will increase the price of delivered CNG by ₹2 per kg, the state-run company said in a statement.
Following this, the revised delivered price, inclusive of taxes, for CNG will be ₹77 per kg in and around the country’s financial capital.
MGL last increased prices in July this year by ₹1.5 per kg. The price hike was due to a reduction in domestic gas allocation to city gas companies.
MGL has now raised prices by 2.6%. City gas distribution companies will need to increase prices by 8-10% to fully pass on the impact of rising costs.
Recently, shares of Mahanagar Gas and Indraprastha Gas, were downgraded by analysts after the government cut its APM gas allocation to these companies by another 20%.
The total Administered Price Mechanism (APM) gas availability for these companies now stands between 40% to 45% from 65% to 70% a month earlier. The allocation figure in financial year 2021 stood at 154%.
Global brokerage firm Jefferies had said that it is baking in the APM gas allocation falling to nearly nil by the middle of calendar year 2025.
The brokerage had lowered its financial year 2026 Earnings per Share (EPS) estimates for Mahanagar Gas, Indraprastha Gas and Gujarat Gas by 31%, 27% and 19%, respectively.
Accordingly, Jefferies had downgraded Mahanagar Gas to ‘Underperform’ from its earlier rating of ‘Buy’ and slashed its price target to ₹1,130, while IGL has been downgraded to ‘Underperform’ from its earlier rating of ‘Hold’ and also reduced its price target to ₹295 from ₹330 earlier.
JPMorgan too has downgraded Mahanagar Gas to ‘Neutral’ from ‘Overweight’ and cut its price target of ₹1,300 and downgraded IGL to ‘Underweight’ as well and cut its price target to ₹343.
CLSA believes that without any price hikes, this move could result in a hit of 30% to 45% on unit EBITDA margins of IGL and MGL.
MGL shares were trading 2.53% higher at ₹1,153.85 today. The stock has declined 4% so far in 2024.
First Published: Nov 22, 2024 9:32 AM IST
