Company Update : Mahanagar Gas by Motilal Oswal Financial Services Ltd

Provision reversal drives beat; volumes in-line
* Total volumes were in-line with our estimate at 4.2mmscmd (+10% YoY).
* Both CNG and D-PNG volumes came in line with estimates. I/C PNG volumes stood 11% above our estimate.
* EBITDA/scm came in above our estimate at INR12.6. However, adjusted EBITDA/scm came in at INR9.7 (our est. INR10.6).
* Beat on margins was on account of the reversal of provisions amounting to INR1.1b (impact of INR2.9/scm), based on negotiations with OMCs with respect to the trade margins.
* On a QoQ basis, adj. EBITDA/scm margin expanded INR1.3 (lower than our est. of INR2.2), as adj. realization improved 0.6/scm and opex decreased INR0.7/scm. Gas cost remained similar QoQ at INR32.1/scm.
* Reported EBITDA came 20% above our est. at INR4.9b (+16% YoY).
* MAHGL’s PAT also came 18% above our est. at INR3.2b (+14% YoY).
* Depreciation stood above our est., while other income came in below our est.
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