Mahanagar Gas shares rise as Morgan Stanley initiates coverage 

Shares of Mahanagar Gas Ltd rose nearly 6% on Tuesday after global brokerage Morgan Stanley initiated coverage on city gas distribution player with an 'overweight' rating. The brokerage gave a target price of Rs 1,606, a 31 percent upside to the previous close. Mahanagar Gas shares rose 5.62% to Rs 1297 against the previous close of Rs 1227.95 on BSE. Market cap of the firm rose to Rs 12,535 crore. 

Total 0.51 lakh shares of the firm changed hands amounting to a turnover of Rs 6.53 crore on BSE. 
Mahanagar Gas shares are trading higher than the 5 day, 10 day, 20-day, 30 day and lower than the 50-day, 100-day, 150 day and 200-day moving averages.

Mahanagar Gas sees natural gas as the fuel of the future for Mumbai. MGL is at the forefront of this shift, which Morgan Stanley calls a 'Tesla-like moment' for gas adoption in the city.

The global gas market is likely to stay balanced in 2025 but may see oversupplies by 2027. Nearly 20 percent 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.

Net profit slipped 16.5% to Rs 283 crore in the second quarter against Rs 339 crore in the same period last year. 

Revenue from operations rose 8.6% to Rs 1,877 crore against Rs 1,728 crore a year earlier, as the company benefitted from higher sales volumes.

However, total expenses rose 18% to Rs 1,555 crore, led by a 20% surge in natural gas costs, which significantly impacted the bottom line. 

Mahanagar Gas is in the business of City Gas Distribution, presently supplying Natural Gas in Mumbai including its adjoining areas and the Raigad district in Maharashtra.