Mahanagar Gas Stock Valuations Turn Attractive After 30% Fall in 8 months. Time to Buy?

Mahanagar Gas Share Price in Focus Today: Mahanagar gas, which is engaged in the business of City Gas Distribution (CGD), Has Seen Its Share Price Hammered by Dalal Street Investors in Recent Months, Resulting in a 30% Declining Estory Estory Estory Falling from 1,988 to the Current Trading Level of 1,393 Apiece.

The weight in the stock was driven by pressure on Margins due to Higher raw material costs, coupled with multiple apm de-allocations and a lacquery regarding future apm allocations. However, domestic brokerage firm Motilal Oswal Believes The Recent Correction has made the stock’s Valuation Attractive and Maintains a positive stance on the stock.

The brokerage said that Company Fundamentals are undergoing a transformative shift, citing two emerging tailwinds: Weaker Crude Pries and a Lower Pricing Slope for Natural Gas.

It notes that the weak crude price outlook, along with an impending lng glut, will likely lower gas costs for CGD Companies. While Brent Crude Pries Averaged UsD 75.8 per Barrel in Q4Fy25, Motilal Forecasts BRENT to Average UsD 65 per Barrel in FY26 and FY27.

According to the brokerage, every usd 10 per barrel decline in breast prisles reduces the landed cost of natural gas by usd 2.3 per mambu. Further, Motilal’s Discussions With the Listed and Unlished Indian CGD Companies Indicate that New Long-Term Gas Contracts are Alredy Being Signed for A 1.0-3% Lower Slope, Given the expected surgein in LG Supply in 2hfy26 and beyond.

Multiple initiatives will drive volume growth

The company, in the recent analyst met, maintained its over 10% yoy Volume Growth Guidance for the Next 2-3 years, While Motilal Expects A 10% Cagr in Volume Over Fy25-27, Driven by Muliple Initiatives implemented by the company, such as collaborating with Oms to Drive Conversions of Commercial CNG Vehicles and Providing Guaranteed Price Discounts to New I/C-PNG CUSTOMERSERS

According to the management, EVS have limited overlap with the typical CNG customer base. Further, 15 Best Depot CNG stations shall now be available for Specific Commercial Vehicles for Fueling, Subject to Prior registration.

By FY30, the company aims to add 250 cng filling stations and upgrade existing stations. Further, The 1 GW Battery Manufacturing Factory, Entailing a Capex of 9 Billion (Mgl’s Equity Stake: 40%), Shall Start in 12-14 months. Further, while Both CBG and LNG Business Segments are at the Initial Stages, The Company Believes in Scaling Up these Businesses Rapidly Over the Next Few Years, Said the Brookerage.

Stock Trades at Attractive Valuation

Mahanagar Gas Remains The Brokerage’s Preferred Pick Among CGDs and Retained Its Estimates as it Forecasted The Company’s Volumes to Clock A 10% Cagr Over Fy25-27 and estimated an ebitda margin of 10/scm during the period. It reiterated ‘Buy’ with a price target of 1,760 apiece.

The stock currently trades at 11x fy27e eps of 121. The brokerage valued the stock at 15x fy27e EPS to Arrive at its price target of 1,760.

Disclaimer, The views and recommendations giving in this article are that of individual analysts. These do not represent the views of Mint. We Advise Investors to Check With Certified Experts Before Taking Any Investments Decisions.