1Q: EBITDA beat; Medium-term volume growth likely at 8-9% p.a.

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Mahanagar Gas

1Q: EBITDA beat; Medium-term volume

growth likely at 8-9% p.a.

Reiterate Rating: BUY | PO: 1,330 INR | Price: 1,121 INR

1Q: EBITDA beat

03 August 2026

Mahanagar Gas' (MGL) 1Q'FY27 standalone EBITDA of INR3.4bn was 12% above BofAe,

mainly on higher-than-expected PNG realizations. Volumes averaged 4.77mmscmd (+7%

YoY), led by CNG at 3.5mmscmd (+10% YoY). Adjusted EBITDA margin rose to

INR7.9/scm (vs INR6.2/scm in 4Q'FY26), driven by higher PNG-I&C realizations linked to

elevated alternate-fuel prices, alongside favorable HH-linked gas costs. PNG-I&C

volumes declined 7.2% YoY to 0.65mmscmd, primarily on the government-directed 20%

supply curtailment. We maintain Buy, with MGL positioned for 8–9% volume CAGR over

FY26–29E, supported by steady CNG registrations across its GAs.

Equity

Growth capex accelerates; gas-cost headwinds persist

Management guided to FY27 capex of INR15–18bn (vs INR12bn earlier) to accelerate

pipeline rollout and D-PNG connections under PNG Drive 2.0, framing it as a

preponement rather than an increase in total project spend; the dividend will be

maintained despite the higher outlay. On sourcing, 1Q gas comprised ~30% APM, ~21–

22% NWG-plus-pooled and ~14–15% HPHT, with Henry Hub at ~21–22%. Management

reiterated its through-cycle EBITDA margin target of INR8–9/scm, cautioning this holds

over the longer term rather than any single quarter, with near-term margins likely under

pressure for one-to-two months until the West Asia situation eases.

Management stressed demand is not the constraint; gas availability is. It targets 0.8–

1mn D-PNG conversions in FY27 (subject to plumber, meter and pipe bottlenecks), which

could lift D-PNG volume growth to 7–8% p.a. over two-to-three years, from 5–6%

historically, by tapping connected-but-non-consuming households. CNG and overall

volume growth are guided at a sustainable 8–9% under normalized supply and pricing,

with double-digit possible if gas availability for I&C improves. UEPL volumes rose over

30% YoY to 0.32mmscmd, against long-term potential of 1.2mmscmd, nearly 4x current

levels, while strong growth in GA2 and GA3 provides ample medium-term headroom.

2025A

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