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  • 12 Nov 2022
  • ICICIdirect Research

MAHANAGAR GAS (MGL) REPORTED ITS Q2FY23 RESULTS THAT WERE LOWER

MGL - 1239 Change: -9.60 (-0.77 %)

News:

Revenue increased 89.2% YoY and 7.8% QoQ to Rs 1717.5 crore against our estimate of Rs 1729.5 crore. Revenue growth was on account of higher realisation. Realisation increased Rs 3.2/scm QoQ to Rs 54/scm and was in line with estimate

·         Sales volume stood at 3.46 mmscmd, an increase of 10.7% YoY, against our estimate of 3.5 mmscmd. CNG segment reported growth of 13.7% YoY to 2.54 mmscmd (our estimate: 2.6 mmscmd). PNG volumes increased 3.1% YoY to 0.9 mmscmd, in line with estimates. On a QoQ basis, volumes remained flattish

·         Higher realisation was offset by rise in raw material cost and gross margins stood at Rs 13/scm, down Rs 2.6/scm YoY. On QoQ basis, gross margin declined by Rs 1.4/scm. EBITDA was at Rs 252.8 crore, down 16.2% YoY and down 11.5% QoQ, lower than our estimate of Rs 304 crore. EBITDA/scm stood at Rs 7.9/scm, down Rs 2.6/scm YoY and down Rs 1.2/scm QoQ

·         On the profitability front, PAT was down 19.7% YoY (down 11.5% QoQ) to Rs 163.9 crore, lower than estimate of Rs 198.7 crore

View:

 In the current quarter (Q3FY23-TD), spot LNG prices are trading at elevated level. The company has further hiked CNG and PNG prices to pass on increase in pooled gas costs. Going ahead, the government is planning to set up a committee to review the gas pricing mechanism which would likely reduce the gas sourcing cost of CGDs. Sales volume growth and sustainability in margins at higher level will be key monitorables going ahead.

Impact:

Negative