Mahanagar Gas Shares Climb as Morgan Stanley Begins Coverage
14th Jan 2025
Morgan Stanley's Bullish Outlook on Mahanagar Gas
Shares of Mahanagar Gas Ltd rose nearly 6% on Tuesday after global brokerage Morgan Stanley initiated coverage on the city gas distribution player with an 'overweight' rating. The brokerage gave a target price of Rs 1,606, a 31% upside to the previous close of Rs 1,227.95. Morgan Stanley believes Mahanagar Gas is at the forefront of Mumbai's shift towards natural gas, which it calls a 'Tesla-like moment' for gas adoption in the city.
Mahanagar Gas' Performance and Financials
Mahanagar Gas shares rose to Rs 1,297, taking the company's market cap to Rs 12,535 crore. However, the company's net profit slipped 16.5% to Rs 283 crore in the second quarter, even as revenue from operations rose 8.6% to Rs 1,877 crore. This was primarily due to a 20% surge in natural gas costs, which significantly impacted the bottom line.
Mahanagar Gas' Role in Mumbai's Shift to Natural Gas
Mahanagar Gas sees natural gas as the fuel of the future for Mumbai, and the global gas market is likely to see oversupplies by 2027. Nearly 20% of MGL's gas supply is linked to LNG, and while margins might tighten, Morgan Stanley believes the company's strong volume growth will drive its market re-rating.
Shares of Mahanagar Gas Ltd rose nearly 6% on Tuesday after global brokerage Morgan Stanley initiated coverage on the city gas distribution player with an 'overweight' rating. The brokerage gave a target price of Rs 1,606, a 31% upside to the previous close of Rs 1,227.95. Morgan Stanley believes Mahanagar Gas is at the forefront of Mumbai's shift towards natural gas, which it calls a 'Tesla-like moment' for gas adoption in the city.
Mahanagar Gas' Performance and Financials
Mahanagar Gas shares rose to Rs 1,297, taking the company's market cap to Rs 12,535 crore. However, the company's net profit slipped 16.5% to Rs 283 crore in the second quarter, even as revenue from operations rose 8.6% to Rs 1,877 crore. This was primarily due to a 20% surge in natural gas costs, which significantly impacted the bottom line.
Mahanagar Gas' Role in Mumbai's Shift to Natural Gas
Mahanagar Gas sees natural gas as the fuel of the future for Mumbai, and the global gas market is likely to see oversupplies by 2027. Nearly 20% of MGL's gas supply is linked to LNG, and while margins might tighten, Morgan Stanley believes the company's strong volume growth will drive its market re-rating.