Here's what makes Mahanagar Gas an attractive stock
Taking a bullish stance on MGL, Jefferies upgraded the stock to ‘buy’ and raised the target price from Rs 1,100 per share to Rs 1,320 per share as it sees a strong 27 percent growth in earnings in the next fiscal.
Lower gas cost, high volume growth prospects and the highest priority in allocation are the key factors that would drive margins of Mahanagar Gas Ltd (MGL), leading to a potential upside of up to 28 percent to its shares, according to analysts at Jefferies.
Taking a bullish stance on MGL, the brokerage has upgraded the stock to ‘buy’ and raised the target price from Rs 1,100 per share to Rs 1,320 per share as it sees a strong 27 percent growth in earnings in the next fiscal.
Jefferies in a report mentioned that recent partnerships with original equipment makers (OEM) entered into by MGL would support volume growth.
MGL’s lower HPHT (high pressure high temperature) gas cost and the highest priority in allocation provide storing margin visibility, Jefferies stated in the report.
The brokerage raised the FY24/25 earnings forecast to six percent/27 percent on the back of expected higher volume and margin estimates.
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“Risk reward is favorable with valuations at 10 times forward price to earning ratio, 1 SD below last five-year average and healthy dividend yield is at a healthy level of four percent,” Jefferies said.
Shares of MGL surged 5.25 percent to hit a high of Rs 1,083 apiece on BSE at 10.14 AM following the positive commentary by analysts.
The stock has gained around 35 percent in the past 12 months but now it trades around 5 percent down from the 52-week high of Rs 1,144.75 hit on August 2, 2023.
Earlier in May, MGL announced a partnership with Brihanmumbai Municipal Corporation (BMC) for setting up Asia's largest bio-gas plant in Mumbai.
The plant would treat 1,000 tonnes of wet waste every day. Once completed, the plant will be able to treat one-third of the daily wet waste generated in Mumbai.
(Edited by : Asmita Pant)
First Published: Oct 3, 2023 11:23 AM IST
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