Strong 1Q beat on higher I/C realizations: Expect strong volume growth in CNG and DPNG; margin pressure likely in the near-term on spot gas reliance

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Strong 1Q beat on higher I/C realizations: Expect strong volume growth in CNG and DPNG; margin pressure likely in the near-term on spot gas reliance

Global Markets Research

Mahanagar Gas MGAS.NS MAHGL IN 2 August 2026

EQUITY: INDIA RENEWABLES & CLEAN ENERGY

Rating Remains BuyStrong 1Q beat on higher I/C realizations

Target priceExpect strong volume growth in CNG and DPNG; margin Increased from INR 1,465pressure likely in the near-term on spot gas reliance INR 1,430

1QFY27 above estimates on higher margins led by strong I/C realisations Closing31 July 2026price INR 1,121

Mahanagar Gas (MGL) reported 1Q adjusted EBITDA of INR3.4bn, up 32% q-q, and ahead of both

our/consensus estimates by ~40%/30% (Fig.1). The beat can be largely attributed to higher-than- Implied upside +30.7%

expected net realization of INR54.7/scm (+12% q-q, 8% ahead of our estimate). Overall volume at

4.8mmscmd increased 2% q-q and 7% y-y. Realizations from Industrial/Commercial (I/C) Market Cap (USD mn) 1,160.4

customers recorded a sharp ~65%+ increase q-q due to the higher cost of alternate fuels (LPG/fuel ADT (USD mn) 3.4

oil). CNG volumes grew a healthy 10% y-y, marking the highest level of the past five quarters. Unit

EBITDA of INR7.9/scm was up 28% q-q, and 40% above our estimate. Adjusted net income at Relative performance chart

INR1.9bn was up 47% q-q, 60% ahead of our estimate.

MGL continues to get lower than contracted HH-linked LNG, which along with the discontinuation of

pooled gas mechanism, may require it to use spot LNG to fill the sourcing volume gap. 2Q will likely

record the full quarter impact of price hikes taken in April-May which should help improve margins.

We like MGL for its strong growth and margin profile, while current valuation is palatable at ~7.2x