MGL shares down 10% in 3 months; Geojit upgrades stock to 'Buy', check target
Geojit has now upgraded the city gas distributor to 'Buy', saying the company delivered a steady operational performance in the March 2026 quarter despite LNG supply disruptions and margin pressure.
- May 27, 2026,
- Updated May 27, 2026 5:42 PM IST
Shares of Mahanagar Gas Ltd (MGL) ended Wednesday's session 0.79 per cent higher at Rs 1,103. Even after the day's gain, the stock has slipped 9.55 per cent over the past three months.
Geojit has now upgraded the city gas distributor to 'Buy', saying the company delivered a steady operational performance in the March 2026 quarter despite LNG supply disruptions and margin pressure.
"In Q4 FY26, the company's consolidated revenue rose 4.9 per cent YoY (year-on-year) to Rs 2,259 crore, as higher gas sales and calibrated price actions more than offset the curtailment of supplies to industrial and commercial amid a disruption in liquified natural gas (LNG) supplies due to the conflict in West Asia," the brokerage stated.
MGL's overall gas sales volume rose 6.2 per cent YoY to 4.672 mmscmd, supported by healthy demand across key segments.
"Gas sales volume increased 6.2 per cent YoY to 4.672 mmscmd on the back of growth in compressed natural gas (CNG) volume of 7.2 per cent to 3.349 mmscmd, domestic piped natural gas (DPNG) volume of 2.4 per cent to 0.605 mmscmd, and industrial and commercial volume of 4.8 per cent YoY to 0.719 mmscmd despite a partial curtailment amid LNG supply disruptions," it added.
However, elevated gas procurement costs and margin pressure impacted the company's profitability during the quarter.
"EBITDA fell 34.2 per cent YoY and EBITDA margin contracted 690 bps (basis points) YoY to 11.5 per cent, owing to lower gross profit, elevated gas sourcing cost and margin pressure from LNG supply disruptions," Geojit also said.
The brokerage noted that profit after tax (PAT) declined 46.3 per cent YoY to Rs 130 crore, owing to the deterioration in operating margin and increase in gas procurement cost.
Despite near-term pressure on earnings, Geojit remains constructive on the company's long-term outlook, citing strong infrastructure expansion, customer additions and supportive regulatory changes.
"MGL posted steady performance, driven by robust infrastructure expansion, strong customer additions across domestic PNG and CNG, and prioritised gas allocation, ensuring uninterrupted supply to core segments. Going forward, the management expects accelerated growth in volume, supported by regulatory reforms that have simplified permissions, reduced road reinstatement charges and ensured faster network deployment. The company also remains focused on expanding its pipeline network, enhancing customer connectivity, and implementing calibrated pricing actions to protect margins," Geojit further stated.
"Hence, we upgrade our rating to BUY on the stock, with a revised target price (12-month) of Rs 1,352, based on 14x rolled-forward FY28E adj EPS," the brokerage concluded.
Shares of Mahanagar Gas Ltd (MGL) ended Wednesday's session 0.79 per cent higher at Rs 1,103. Even after the day's gain, the stock has slipped 9.55 per cent over the past three months.
Geojit has now upgraded the city gas distributor to 'Buy', saying the company delivered a steady operational performance in the March 2026 quarter despite LNG supply disruptions and margin pressure.
"In Q4 FY26, the company's consolidated revenue rose 4.9 per cent YoY (year-on-year) to Rs 2,259 crore, as higher gas sales and calibrated price actions more than offset the curtailment of supplies to industrial and commercial amid a disruption in liquified natural gas (LNG) supplies due to the conflict in West Asia," the brokerage stated.
MGL's overall gas sales volume rose 6.2 per cent YoY to 4.672 mmscmd, supported by healthy demand across key segments.
"Gas sales volume increased 6.2 per cent YoY to 4.672 mmscmd on the back of growth in compressed natural gas (CNG) volume of 7.2 per cent to 3.349 mmscmd, domestic piped natural gas (DPNG) volume of 2.4 per cent to 0.605 mmscmd, and industrial and commercial volume of 4.8 per cent YoY to 0.719 mmscmd despite a partial curtailment amid LNG supply disruptions," it added.
However, elevated gas procurement costs and margin pressure impacted the company's profitability during the quarter.
"EBITDA fell 34.2 per cent YoY and EBITDA margin contracted 690 bps (basis points) YoY to 11.5 per cent, owing to lower gross profit, elevated gas sourcing cost and margin pressure from LNG supply disruptions," Geojit also said.
The brokerage noted that profit after tax (PAT) declined 46.3 per cent YoY to Rs 130 crore, owing to the deterioration in operating margin and increase in gas procurement cost.
Despite near-term pressure on earnings, Geojit remains constructive on the company's long-term outlook, citing strong infrastructure expansion, customer additions and supportive regulatory changes.
"MGL posted steady performance, driven by robust infrastructure expansion, strong customer additions across domestic PNG and CNG, and prioritised gas allocation, ensuring uninterrupted supply to core segments. Going forward, the management expects accelerated growth in volume, supported by regulatory reforms that have simplified permissions, reduced road reinstatement charges and ensured faster network deployment. The company also remains focused on expanding its pipeline network, enhancing customer connectivity, and implementing calibrated pricing actions to protect margins," Geojit further stated.
"Hence, we upgrade our rating to BUY on the stock, with a revised target price (12-month) of Rs 1,352, based on 14x rolled-forward FY28E adj EPS," the brokerage concluded.