Company Update : Mahanagar Gas Ltd By Motilal Oswal Financial Services Ltd
Standalone performance in line; UEPLs’ EBITDA declines sequentially QoQ
MAHGL’s standalone performance was in line with estimates in 3Q amid steady margins and strong volume growth (both in line with estimates). While CNG volumes were 4% below our estimates, I&C-PNG volumes came in 18% above estimates. The impact of APM twin de-allocation was clearly visible as margins contracted INR2.4/scm QoQ. We note that Spot LNG prices were high, averaging USD13.9/mmbtu in 3Q (up 7% QoQ), and continue to remain elevated in 4QFY25’td, averaging USD14.2/mmbtu. On 22 Nov’24, Mahanagar Gas Limited (MAHGL) implemented a price hike of INR2/kg for Compressed Natural Gas (CNG) in Mumbai and nearby regions. In a recent press release, IGL stated that, as communicated by GAIL, its domestic gas allocations had been increased by 31%, effective from 16 Jan’25. A similar reallocation can be assumed for MAHGL as well. Recently (press release), MAHGL received an order from the JC, CGST, and Central Excise, Mumbai East Commissionerate, confirming a demand of ~INR543m, along with applicable interest and a 100% penalty of the same amount. Any update on the matter remains a key monitorable.
Standalone 3Q performance
* Total volumes were in line with est. at 4.1mmscmd (+12% YoY).
* While CNG volumes were marginally below our estimates, I&C-PNG volumes came in 18% above estimates.
* EBITDA/scm came in line with our estimate at INR8.3 (-38% YoY). Gas costs and other expenses were higher QoQ.
* The resultant standalone EBITDA was in line with our estimate at INR3.1b (-30% YoY).
* While other income was above our estimates, depreciation stood above our estimates.
* Hence, PAT came in line with our estimate at INR2.3b (our est. INR2.2b, -29% YoY).
Consolidated figures, including Unison Enviro Private Limited (UEPL)
* In 3QFY25, net sales stood at INR18.5b (+3% QoQ).
* EBITDA stood at INR3.3b (-21% QoQ), led by a decline in margins and higher employee benefits expense QoQ.
* On a QoQ basis, EBITDA for UEPL contracted sharply (-30% QoQ) in 3QFY25, leading to lower consolidated EBITDA QoQ.
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