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Mahanagar Gas - Q1FY21 First Cut - ICICI Securities

Posted On: 2020-08-08 22:20:31

(CMP: Rs. 969; MCap: Rs. 9572 crore)

Mahanagar Gas (MGL) reported its Q1FY21 results which were below our estimates on the profitability front. The topline declined 66.6% YoY to Rs. 277.5 crore, lower than our estimate of Rs. 332.6 crore due to lower than expected sales volume. The volumes came in at 1.1 mmscmd, down 62.5% YoY due to lockdown (our estimate: Rs. 1.3 mmscmd). Gross margins were better than estimate and increased Rs. 0.9/scm YoY to Rs. 16.1/scm due to lower gas costs. EBITDA at Rs. 80 crore was below our estimates of Rs. 97 crore. Reported PAT stood at Rs. 45.3 crore, down 73.4% YoY (our estimate: Rs. 58.2 crore).

Q1FY21 Earnings Summary

- The topline declined 66.6% YoY to Rs. 277.5 crore and came in lower than our estimates of Rs. 332.6 crore. Realisations were largely in line with estimates at Rs. 27.4/scm

- Sales volume came in at 1.1 mmscmd, a sharp fall of 62.5% YoY due to lockdown (our estimate: 1.3 mmscmd). CNG segment reported de-growth of 77.8% YoY to 0.5 mmscmd (our estimate: 0.8 mmscmd). PNG volumes de-grew 21.2% YoY to 0.6 mmscmd and were marginally above our estimates

- Gross margins increased Rs. 0.9/scm YoY on account of better pricing power and lower gas costs. On a QoQ basis, gross margins increased Rs. 0.8/scm due to lower gas costs. EBITDA at Rs. 80 crore (down 71.1% YoY) was lower than our estimates of Rs. 97 crore. EBITDA/scm stood at Rs. 7.9/scm, down Rs. 2.4/scm YoY impacted by negative operating leverage

- On the profitability front, PAT was down 73.4% YoY to Rs. 45.3 crore (our estimate: Rs. 58.2 crore)

MGL's CNG and industrial/commercial PNG sales were significantly affected during lockdown. Sales volume improved from April lows and were at 50% of normal levels in June. Recovery in demand with resumption of economic activities will be key to profitability in near term.

Shares of Mahanagar Gas Ltd was last trading in BSE at Rs.969.1 as compared to the previous close of Rs. 983.7. The total number of shares traded during the day was 39325 in over 2188 trades.

The stock hit an intraday high of Rs. 988.7 and intraday low of 959.3. The net turnover during the day was Rs. 38170346.

We would be coming out with a detailed report soon.

Source: Equity Bulls

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