Impact of CNG Price Slash on Mahanagar Gas Ltd’s Stock

The share price of Mahanagar Gas Ltd (MGL) slumped ~16.51% to the day low of ₹1,301.30 on Wednesday, March 6, 2024, at 1:01 PM after the reduction in compressed natural gas (CNG) prices by ₹2.5 per kg in and around Mumbai. The revised prices of CNG were ₹73.50 per kg effective from midnight of March 5, 2024/ morning of March 6, 2024. The cut in gas prices has been supported by a decline in gas input costs. The share of Mahanagar Gas has delivered a return of ~23.58% and ~42.24% in the past 6 months and 1 year, respectively.

About Mahanagar Gas Ltd

Mahanagar Gas Ltd (MGL) operates the City Gas Distribution (CGD) business. The company currently supplies natural gas in Mumbai, including adjoining areas and the Raigad District located in Maharashtra. MGL has infrastructure exclusivity for Extension areas of Mumbai (GA2) and Raigad (GA3) till 2030 and 2040 respectively.

Operational and Financial Performance

On February 01, 2024, MGL acquired a 100% stake in Unison Enviro Private Limited (UEPL) through the purchase of shares from its existing shareholders at a cash consideration of ₹562.09 crore. During Q3 FY2024, MGL reported revenue from operations amounting to ₹1,723.77 crore against ₹1,838.44 crore in Q3 FY 2023 on a standalone basis. In addition, profit after tax for the period stood at ₹317.38 crore against ₹172.07 crore in Q3 FY 2023.

Industry Prospects

The oil and gas industry in India is one of the significant contributors to the country’s economic growth and development. The growth in Industry is backed by the rising population, urbanisation, and burgeoning industrialisation, which have collectively resulted in a substantial upswing in energy consumption, thereby generating substantial prospects for the industry. The primary energy demand is expected to nearly double to 1,123 million tonnes of oil equivalent, as India’s gross domestic product (GDP) is likely to increase to US$ 8.6 trillion by 2040.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.