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CD Equisearch
Mahanagar Gas (Accumulate)
CMP: ₹922.65
Target: ₹1,067
According to the US energy Information Administration India Report, 2016, India was the third largest energy consumer in the world after China, the US and Russia in 2013. India has been on a constant economic growth path from the past two decades and this rise is coupled with increased energy consumption to thrust the fast growing economy.
The decision of the Centre allowing supply of domestic gas up to 110 per cent of domestic gas allocation for CNG (transport) and PNG (domestic) segments of Mahanagar Gas Ltd (MGL) is immensely helpful in maintaining competitiveness of CNG and PNG against competing alternate fuels. This dispensation of the Union Government would enable MGL to meet fluctuation in demand and cater to most of the incremental demand in these segments from domestic gas sources.
MGL is a virtual monopoly in Mumbai and its adjoining areas.
MGL will invest ₹200-225 crore annually over the next few years to expand its CGD network into newer regions.
The prospect of industrial consumers favouring imported gas to other fuels is likely to boost the PNG growth rate.
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