MGL - Mahanagar Gas Limited Share Price

Mahanagar Gas Limited (MGL) management provided an optimistic outlook during the Q4 FY25 earnings call. The company reported an increase in sales volumes, with an average of 4.194 mmscmd in Q4, up from 4.116 mmscmd in the previous quarter. For the full year ending March 31, 2025, the average sales volume rose to 4.045 mmscmd, a 12.27% increase year-on-year. Notably, the company saw substantial growth in CNG volume, which rose from 2.591 mmscmd to 2.878 mmscmd, reflecting an 11.08% increase.

For FY26, management anticipates a continuation of this trend with sales volume expected to grow at a rate of around 10%. The EBITDA margin guidance for FY26 is set between Rs. 9 to Rs. 11 per unit, while the OPEX is projected to rise due to increased CNG volumes and promotional expenses.

Key strategic moves highlighted include the addition of 40 CNG stations and 3,43,000 domestic households connected in FY25. MGL's net profit after tax for the quarter increased to Rs. 252 crores, a 12% rise from the previous year's profit, despite the yearly net profit dropping to Rs. 1,045 crores from Rs. 1,289 crores primarily due to reduced APM allocation and rising gas costs.

Management also discussed a focus on the industrial and commercial customer segment, projecting potential growth from current levels of 0.6 to 0.7 mmscmd up to about 1 mmscmd in the coming years, leveraging contracts that offer competitive rates.

Furthermore, the company has committed to a capex of Rs. 1,300 crores for FY26, with investments concentrated in pipeline expansions and CNG infrastructure development. The commitment to sustainability through initiatives to promote CNG and electric vehicles was also underscored.

Overall, MGL seems well-positioned to capitalize on the growing demand for natural gas, with strong infrastructure support and a proactive approach to customer engagement and market competition.

Major Questions and Answers from the Q&A Section:

1. Question: Could you please share the amount spent on marketing and CSR in 4th Quarter?

   • Answer: We spent approximately Rs. 11 crores on marketing and around Rs. 10 crores on CSR activities in the 4th Quarter. The increase in OPEX is primarily attributed to higher maintenance activities typical of this period, alongside the marketing and CSR expenditures.

2. Question: Breakdown of 4.2 mmscmd "“ how much came from APM and RLNG, spot?

   • Answer: Out of the 4.2 mmscmd, approximately 2 million is from APM, about 0.5 million from HPHT, around 1.35 to 1.4 mmscmd stems from term contracts (Brent and Henry Hub linked), and the rest from IGX, largely through HPHT.

3. Question: What is the status of the Bombay High Court-led committee on vehicle transition?

   • Answer: We have had several meetings, discussing measures to curb pollution and promote CNG and EV adoption. A report will be submitted to the High Court in about a month, yielding positive discussions thus far.

4. Question: Can you break down how much of your LNG gas sourcing is crude linked vs. Henry Hub?

   • Answer: Out of 1.3 mmscmd, approximately 1.27 mmscmd is linked to Henry Hub and roughly 0.1 mmscmd is linked to Brent.

5. Question: What are your revised EBITDA margins guidance for FY '26?

   • Answer: Given current dynamics, our guidance for FY '26 EBITDA margins is around Rs. 9 to Rs. 11. While expensive factors may press margins, it also varies due to geopolitical and pricing conditions; we will monitor the situation closely.

6. Question: Can you comment on the performance of PNG industrial and commercial volumes?

   • Answer: We expect the current I&C sales of 0.6 mmscmd to reach about 1.0 mmscmd in the coming years. The growth has been fueled by large industries and expanding our reach into solid fuel markets.

7. Question: How was the CNG promotion scheme received by consumers?

   • Answer: The scheme introduced from October 2024 to March 2025 resulted in the addition of 624 vehicles, costing about Rs. 32-34 crores in total expenditure. This yielded substantial paybacks due to higher CNG consumption efficiency from these vehicles.

8. Question: What are your CAPEX and volume growth goals for FY '26?

   • Answer: We forecast a CAPEX of Rs. 1,300 crores for FY '26, with substantial investment into CNG and pipeline expansion. Regarding volume, we target a growth rate of around 10% for the year.

9. Question: Any developments on the inclusion of natural gas in the GST regime?

   • Answer: Discussions are ongoing with our regulator and government to eliminate excise duties on CNG and include natural gas in GST. We hope for a favorable outcome in upcoming meetings.

10. Question: How do you expect CNG vehicle additions to fare in light of the slowdown in the auto sector?

    • Answer: Despite the slowdown, we added around 98,000 vehicles this year, with growth rates robust in comparison to other fuels, thanks to incentives and pollution control measures by judicial committees.

These responses summarize significant queries and answers from Mahanagar Gas Limited's Q&A session, highlighting their current operational and strategic outlook.