Mahanagar Gas Receives Buy Recommendation from Geojit Financial Services with a Target Price of Rs 1352

Mahanagar Gas Q4FY26 Performance Disappoints, Despite Revenue Growth

Mahanagar Gas, the leading city gas distribution company in India, has reported a mixed bag of results for the fourth quarter of fiscal year 2026. The company's consolidated revenue rose 4.9% year-over-year (YoY) to Rs. 2,259 crore, driven by higher gas sales and calibrated price actions. However, the growth was partially offset by the curtailment of supplies to industrial and commercial customers amid disruptions in liquified natural gas (LNG) supplies due to the conflict in West Asia.

Key Performance Indicators

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As per the company's research report, gas sales volume increased 6.2% YoY to 4.672 million standard cubic meters per calendar day (mmscmd). The growth was driven by a 7.2% increase in compressed natural gas (CNG) volume to 3.349 mmscmd, a 2.4% increase in domestic piped natural gas (DPNG) volume to 0.605 mmscmd, and a 4.8% increase in industrial and commercial volume to 0.719 mmscmd, despite a partial curtailment of supplies due to LNG supply disruptions.

However, the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 34.2% YoY, and the EBITDA margin contracted 690 basis points (bps) YoY to 11.5%. The decline in EBITDA and EBITDA margin was attributed to lower gross profit, elevated gas sourcing cost, and margin pressure from LNG supply disruptions. As a result, the profit after tax decreased 46.3% to Rs. 130 crore, primarily due to the deterioration in operating margin and increase in gas procurement cost.

Outlook and Recommendation

Based on the company's performance, Geojit Financial Services has upgraded its rating to BUY on the stock, with a revised target price of Rs. 1,352. The revised target price is based on a 14x rolled-forward fiscal year 2028 estimate adjusted earnings per share (EPS).

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