Mahanagar Gas Stock Falls After Q3 Results
Mahanagar Gas volumes fell 9% year-on-year but rose more than 30% over the preceding three months in Q3.
Shares of Mahanagar Gas Ltd. fell even as earnings rose and margin expanded in the third quarter.
The city gas distributor reported a 17% year-on-year rise in net profit at Rs 217.2 crore in the three months ended December, according to its exchange filing. That compares with the Rs 197.4-crore consensus estimate of analysts tracked by Bloomberg.
The company also saw its volumes drop 9% over the year earlier at 2.8 mmscmd in the reported period, but rose 33% sequentially. Also, daily sales volumes, it said, have almost reached the pre-lockdown level and are picking up.
Still, for the nine months ended December, overall volumes remained 33.8% lower at 1.98 mmscmd, impacted by the disruptions caused by the coronanvirus pandemic.
- Net sales fell 11% over the prior year to Rs 666.3 crore.
- Operating profit or Ebitda rose 22% to Rs 316.7 crore, compared with the Rs 278.2-crore forecast.
- Margin expanded to 43.5% from 31.6%, owing to lower domestic gas costs and operating leverage.
“Even though the underlying margin drivers are on track, this is not reflected in the street estimates,” Jefferies India said in a post-earnings note. “While a potential floor to domestic gas price is a risk, CNG economics could remain favourable as long as APM is below $5 per mmbtu.” The research firm sees consensus earnings upgrade for the stock and expects it to outperform, even if valuation does not rerate.
Shares of Mahanagar Gas fell as much as 3.6% in early trade on Wednesday to Rs 1,098.8 apiece. Of the 31 analysts tracking the company, 24 have a ‘buy’ rating, four suggest a ‘hold’ and three recommend a ‘sell’.