Mahanagar Gas Oil & Gas | India
Institutional Equity Research
Comapny Update | December 20, 2019
1
Target Price: Rs956
REDUCECMP* (Rs) 1064
Upside/ (Downside) (%) (10)
Bloomberg Ticker MAHGL IN
Market Cap. (Rs bn) 105
Free Float (%) 37.5
Shares O/S (mn) 99
Uphill Battle Continues - Downgrade to Reduce
A series of development could affect Mahanagar Gas (MAHGL) earnings: (1) Private CNG pump owners have refused to sign new agreement with MAHGL of 40% lower commission, mainly due to operating income is 31% higher if the same CNG station plot rent out; (2) Slowdown in monthly CNG conversion to 5K from 7K in FY19 led to only 1.5% CNG volume growth in 1HFY20. Further, majority of new CNG vehicles additions are Auto Rikshaws which are the lowest daily CNG consumers, we continue to believe CNG volume growth 3.5%in FY20E/FY21E/FY22E below than company guidance of 6%; (3) MAHGL has secured 0.3mmscmd gas from R- cluster field at 8.4% slope to Brent price, we believe this is not cheaper gas for PNG industrials customers in soft spot LNG price outlook and (4) In 3QFY20, We expect fall in MAHGL’s EBITDA/scm to ~Rs9/scm from Rs 9.9/scm in 2QFY20. Hence, this implies limited CNG volume growth potential. We downgrade our recommendation on the stock to REDUCE from HOLD with an unrevised DCF-based Target Price of Rs956.
Rent out a CNG Station More Profitable than CNG BZ at 40% Lower Commissions34 Private CNG pump owners have refused to sign new agreement with MAHGL of 40% reduced commission. MAHGL is deciding to reduce CNG commissions of 34 private CNG stations, likely to face closure by March 2020 if no new agreement (News). Our calculation suggests, instead of continuing with lower trade commissions on CNG sale business, private pump owner can rent out CNG station land and earn 31% EBITDA. (See Exhibit 4). MAHGL has 244 CNG stations in Mumbai, Thane & Raigad region, selling CNG at rate of 2.2 mmscmd. If 34 stations stop operations could impact 14% of total CNG volume on temporary basis. Any strike/closure of CNG pumps could hit overall volume growth. Scenario (1) 5 days strike of private CNG pump owners can drag maximum CNG volume sales by 0.54% and EPS by 0.64% in 4QFY20, (2) If no agreement between private CNG pump owners and MAHGL then impact of 10% on CNG sales volume & 12% on EPS for 3 months (4QFY20).
CNG Vehicle Addition @ of 5K/month; Majority of Auto Rikshaws onlyA mere 1.5% CNG volume growth in 1HFY20 is mostly due to overall slowdown in monthly CNG vehicle addition to 5k from 7K in FY19. While the composition of CNG vehicle addition is been changed in last 6 months, our calculation suggest, monthly Auto Rikshaws addition continued to remain same (~4k – which consume lowest volume on daily basis) while the zero registration of Kaali-peelis at Mumbai RTO, other heavy CNG vehicle number is contracted and share of App cab and private cars are falling in overall CNG vehicle composition. Slowdown in overall auto sales numbers have also impacted to CNG volume growth. We maintain our CNG volume growth 3.5%/3.5% for FY20E/FY21E based 1) Delay in BEST CNG bus addition 2) No sign of improvement in share of CNG App cabs/taxi additions (which consume higher CNG on daily basis).
Gas Sourcing at 8.4% Slope not Cheap Compared to Soft Spot LNG PriceMAHGL has bagged gas of 0.3mmscmd in latest auction, new gas production to start from R- cluster field in April 2020. Gas supply from R- cluster field is priced at ~8.4% slope to last 3 months Avg. Brent prices. Mahanagar gas is oblique to take 80% of bagged quantity in a quarter on a “take or pay” clause. Based on our calculations for 2QFY20, R -cluster gas price at (~$5.1/mmbtu) ~8.4% slope to crude price is not cheaper compared to spot LNG price of $4.7/mmbtu (7.2% slope to crude). Brent Crude forward prices are in backwardation from $67/bbl to $63/bbl (See exhibit xx) for period of CY2020, even at price of crude $63/bbl, R-cluster gas price would be $5.3/mmbtu is not cheaper compared to forward spot LNG prices are below $5/mmbtu (see Exhibit 14&15). Further, MAHGL has to incur higher gas transmission cost of ~ $1/mmbtu (Rs71.6/mmbtu) on East -West pipeline compared to ~$0.5/mmbtu (Rs37.7/mmbtu) on Dahej -Panvel pipeline. On net basis, cost of gas (R- cluster) will be higher for PNG industrials and less competitive with alternate fuels. We believe it would be opportunity loss for MAHGL’s gross margin improvement. If cost of gas is cheaper by $1/mmbtu then overall EBITDA/scm likely to improve by Rs0.3/scm. In long term, cheap source of gas/LNG supply will be the major deciding factor to expand PNG industrial segment.
Yogesh Patil
Research Analyst
Contact: (022) 4303 4632
Email: [email protected]
Share price (%) 1 mth 3 mth 12 mth
Absolute performance 1.6 28.1 18.2
Relative to Nifty (1.0) 13.7 6.5
Shareholding Pattern (%) Sep-19 Jun-19
Promoter 32.5 32.5
Public 67.5 67.5
1 Year Stock Price Performance
Note: * CMP as on Dec. 19, 2019
Financials (mn) FY20E FY21E FY22E
Net Sales 30,825 32,621 34,975
EBITDA 10,226 10,831 10,835
Net Profit 7,821 7,793 7,977
EPS 79.2 78.9 79.9
P/E (x) 13.6 13.6 13.4
EV/EBITDA (X) 9.3 8.4 8.1
ROE (%) 30 25 23
Our Estimate vs. Concernses(Rs mn) FY20E FY21E FY22E
Fin in Rs mn FY20E FY21E FY21E
Net Sales - R-Sec 30,825 32,621 34,975
Net Sales - Cons 31,418 33,393 35,571
% change Vs cons -1.9% -2.3% -1.7%
EBITDA -R Sec 10,226 10,831 10,835
EBITDA - Cons 10,521 10,865 11,628
% change Vs cons -2.8% -0.3% -6.8%
PAT 7,821 7,793 7,977
PAT - Cons 7,717 7,643 8,011
% change Vs cons 1.3% 2.0% -0.4%
660
760
860
960
1060
1160
1260
Dec-
18
Jan-
19
Jan-
19
Feb-
19
Mar
-19
Apr-1
9
Apr-1
9
May
-19
Jun-
19
Jun-
19
Jul-1
9
Aug-
19
Aug-
19
Sep-
19
Oct-1
9
Oct-1
9
Nov-
19
Dec-
19
Mahanagar Gas Institutional Equity Research
2
Target Price: Rs956Oil & Gas | India
CMP* (Rs) 1064
Upside/ (Downside) (%) (10)
Bloomberg Ticker MAHGL IN
REDUCE
Exhibit 2: MAHGL’s 1 year forward P/E valuation Exhibit 3: MAHGL’s 1 year forward EV/EBITDA valuation
Source: Bloomberg, RSec Research Estimates
Outlook & ValuationIn 1HFY20, MAHGL reported total gas sales volume growth of mere 2% YoY vs. Company guidance of 6%. To perform 6% total volume growth in FY20, our calculation suggests, MAHGL need to report 10% total volume growth in 2HFY20, which is unlikely. Further, no new GA won by company, no scope of expansion and volume growth from new area. Fall in run rate of vehicle conversion and worst car density in Mumbai (news) will lead to mere 3.0% CNG volume growth in FY19-FY22E. We expect, MAHGL’s FY20E to FY22E EPS CAGR of 1% only. As we envisage fall in EBITDA margin and limited growth potential, which may warrant a de-rating and reduction in PE multiples from the current levels. MAHGL is trading as a consumer play (FY20 P/E of 14x) despite its matured business profile and EBITDA margin reduction, after rise in crude prices and crude linked gas cost. Further, we expect MAHGL’s RoCE/RoE to fall from 24%/24% in FY19 to 22%/22% in FY22E, as the Company is unlikely to sustain consistent growth in EBITDA and PAT over the next 3 years volume growth over FY19-FY22E.We downgrade our recommendation on the stock to REDUCE from HOLD with an unrevised DCF-based Target Price of Rs956.
Exhibit 1: DCF Valuation of MAHGL
(Rs mn) FY20E FY21E FY22E FY23E FY24E FY25E FY26E FY27E FY28E FY29E
PAT 7,821 7,793 7,977 7,754 8,091 8,791 9,529 10,199 10,900 11,632 (+) Depreciation 1,370 1,485 1,559 1,584 1,609 1,631 1,653 1,673 1,692 1,710 (-) Capex (2,201) (2,201) (2,000) (1,500) (1,500) (1,500) (1,500) (1,500) (1,500) (1,500)(-) Change in WC (134) 46 130 121 69 32 32 35 36 36 FCFE 6,856 7,124 7,666 7,960 8,268 8,955 9,715 10,408 11,128 11,878 Year 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5
Disc FCFE 6,536 6,171 6,034 5,694 5,374 5,289 5,214 5,076 4,932 4,784
Rs mn (per sh)
NPV - Continuing Business 64,634 654 NPV - Terminal Value 29,768 301
NPV (consolidated) = Target Price 956
CMP 1,064Downside 10%
Recommendation REDUCE
Source: Rsec Research Estimates
12
13
14
15
16
17
18
19
20
Sep1
8
Oct
18
Nov
18
Dec1
8
Jan1
9
Feb1
9
Mar
19
Apr1
9
May
19
Jun1
9
Jul19
Aug1
9
Sep1
9
Oct
19
Nov
19
Dec1
9
1 Yr Forward PE Avg +1 STD -1 STD
6.00
7.00
8.00
9.00
10.00
11.00
12.00
Sep1
8
Oct
18
Nov
18
Dec
18
Jan1
9
Feb1
9
Mar
19
Apr
19
May
19
Jun1
9
Jul1
9
Aug
19
Sep1
9
Oct
19
Nov
19
Dec
19
1 Yr Forward EV/EBITDA Avg +1 STD -1 STD
Mahanagar Gas Institutional Equity Research
3
Target Price: Rs956Oil & Gas | India
CMP* (Rs) 1064
Upside/ (Downside) (%) (10)
Bloomberg Ticker MAHGL IN
REDUCE
Exhibit 5: Trade commission on CNG sales to private CNG pump owners
Source: Company RHP, R-Sec Research
Rent out a CNG Station More Profitable than CNG BZ at 40% Lower CommissionsPrivate CNG pump owners have refused to sign new agreement with MAHGL with reduced commission (Rs 2.50/kg vs existing Rs 4.10/kg on CNG sale). MAHGL is deciding to reduce CNG commissions of 34 private CNG stations, likely to face closure by March 2020 if no new agreement. While 2 stations have already shut in the ongoing tussle over contracts and agreements between dealers and MAHGL, four more may face closure by December 31.(News) MAHGL was paying commission of Rs 2.74/kg till March 2018 and has been revised to Rs 4.10/kg for dealers and OMC owned CNG pumps. Now based on new agreement, 40% lower commissions on CNG sales is forcing to go out of business to private pump owners. Our calculation suggests, instead of continuing with lower commission on CNG sale business, private pump owner can rent out space and earn 31% operating income (EBITDA). (See Exhibit 4). A land/plot of size ~7,500sq.ft at prime location and road touch can easily fetch rent of Rs ~ Rs 0.3mn/month where he can also get assurance of minimum 5% hike in rentals every year. While the operating income of private CNG pump owner would be ~ 0.28mn/month on new commissions. We believe, new commissions are not tenable.
Exhibit 4: CNG private pump owner financials, Rent out CNG station land to earn 31% higher EBITDA vs. new agreement
Till Mar’18 Now New Rent out
Benefits/Trade discounts (Rs/kg) 2.7 4.1 2.5
Daily CNG sales (kg) 5,000 5,000 5,000
Annual Income (Rs mn) 5.0 7.5 4.6 3.6
Security Deposits (5 day sales) 1.5 1.5 1.5 1.5
Operating Expense
Adminstrative cost & Employee cost 1.8 1.8 1.8 0
Power cost +Telephone & Other 0.12 0.18 0.18 0
AMC (excluding CNG Dispenser and compressor) 0.15 0.15 0.15 0
losses on deposit 0.1 0.1 0.1 0
Income on Security deposit 0.0 0.0 0.0 0.1
EBITDA 2.8 5.3 2.3 3.7
Source: Industry data, 99Acers, R-sec Research
2.74
4.1
2.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Till Mar'18 Now New Agreemnt
Rs/kg
Mahanagar Gas Institutional Equity Research
4
Target Price: Rs956Oil & Gas | India
CMP* (Rs) 1064
Upside/ (Downside) (%) (10)
Bloomberg Ticker MAHGL IN
REDUCE
Temporary Loss of CNG Volume if No Continuation of Private Pump OwnerMAHGL has 244 CNG stations in Mumbai, Thane & Raigad region, selling CNG at rate of 2.2 mmscmd. If 34 stations stop operations could impact 14% of total CNG volume on temporary basis, till alternative station starts and closure of CNG stations will likely increase waiting period. Any strike/closure of CNG pumps could hit overall volume growth. Scenario 1) 5 days strike of private CNG pump owners can drag maximum CNG volume sales by 0.54% and EPS by 0.64% in 4QFY20, 2) If no agreement between private CNG pump owners and MAHGL then impact of 10% on CNG sales volume & 12% on EPS for 3 months (4QFY20) till alternative CNG stations starts. As we expect MAHGL to face challenges to sustain CNG volume growth >6%, while we maintained volume growth assumption at 3.5% for FY20/FY21E.
Exhibit 6: MAHGL’s CNG station break up; CNG private owners 21% Exhibit 7: MAHGL’s CNG sales volume
Source: Company, RSec Research estimates
6%
73%
21%
Owned OMC Franchisees
646 659 694 724791 817 843 871
0
100
200
300
400
500
600
700
800
900
1,000
FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22
MMSCM
Lower CNG Volume Growth on a Change in Composition of CNG Vehicle Addition with Slowing down CNG Vehicle dditionA mere 1.5% CNG volume growth in 1HFY20 is mostly due to overall slowdown in monthly CNG vehicle addition to 5k from 7K in FY19. While the composition of CNG vehicle addition is been changed in last 6 months, our calculation suggest, monthly Auto Rikshaws addition continued to remain same (~4k – which consume lowest volume on daily basis) while the zero registration of Kaali-peelis at Mumbai RTO, other heavy CNG vehicle number is contracted and share of App cab and private cars are falling in overall CNG vehicle composition. Slowdown in overall auto sales numbers have also impacted to CNG volume growth. We maintain our CNG volume growth 3.5%/3.5% for FY20E/FY21E based (1) Delay in BEST CNG bus addition (2) No sign of improvement in share of CNG App cabs/taxi additions ( which consume higher CNG on daily basis).
Exhibit 8: CNG vehicle conversion rate dropped to 5K in 1HFY20 Exhibit 9: Share of Auto Rikshaw are increasing which are lowest CNG consumer on daily basis
Source: Company, RSec Research, Google
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
FY17 FY18 FY19 FY20TD
CNG Vehicle No.
Auto Rikshaws Taxis Cars Other Vehicle
42.8% 43.6% 46.5% 47.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
FY17 FY18 FY19 FY20TD
Auto Rikshaws Taxis Cars Other Vehicle
Mahanagar Gas Institutional Equity Research
5
Target Price: Rs956Oil & Gas | India
CMP* (Rs) 1064
Upside/ (Downside) (%) (10)
Bloomberg Ticker MAHGL IN
REDUCE
468
10121416182022
Jul-1
0Ja
n-11
Jul-1
1Ja
n-12
Jul-1
2Ja
n-13
Jul-1
3Ja
n-14
Jul-1
4Ja
n-15
Jul -1
5Ja
n -16
Jul-1
6Ja
n-17
Jul -1
7Ja
n-18
Jul-1
8Ja
n-19
Jul -1
9
$/mmbtu
Gas sourcing at 8.4% slope not cheap compared to soft spot LNG priceMAHGL has bagged gas of 0.3mmscmd in latest auction, new gas production to start from R- cluster field in April 2020. Gas supply from R- cluster field is priced at ~8.4% slope to last 3 months Avg. Brent prices. Mahanagar gas is oblique to take 80% of bagged quantity in a quarter on a “take or pay” clause. Based on our calculations for 2QFY20, R -cluster gas price at (~$5.1/mmbtu) ~8.4% slope to crude price is not cheaper compared to spot LNG price of $4.7/mmbtu (7.2% slope to crude). Brent Crude forward prices are in backwardation from $67/bbl to $63/bbl (See exhibit xx) for period of CY2020, even at price of crude $63/bbl, R-cluster gas price would be $5.3/mmbtu is not cheaper compared to forward spot LNG prices are below $5/mmbtu (see Exhibit 14&15). Further, MAHGL has to incur higher gas transmission cost of ~ $1/mmbtu (Rs71.6/mmbtu) on East -West pipeline compared to ~$0.5/mmbtu (Rs37.7/mmbtu) on Dahej -Panvel pipeline. On net basis, cost of gas (R- cluster) will be higher for PNG industrials and less competitive with alternate fuels. We believe it would be opportunity loss for MAHGL’s gross margin improvement. If cost of gas is cheaper by $1/mmbtu then overall EBITDA/scm likely to improve by Rs0.3/scm. In long term, cheap source of gas/LNG supply will be the major deciding factor to expand PNG industrial segment.
.
Exhibit 10: A direct co-relation between CNG vehicle addition (monthly) and volume growth on YoY
Exhibit 11: Auto Rikshaws consume lowest CNG volume on daily basis
Source: Company, RSec Research Estimates
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
0
1000
2000
3000
4000
5000
6000
7000
8000
FY16 FY17 FY18 FY19 FY20TD
CNG vehicle addition run rate (LHS) CNG volume growth rate (RHS)
55
107 5
0
10
20
30
40
50
60
BEST BUSES App Cab Private Cars Auto Rikshaws
Kg/day
Exhibit 12: Spot LNG price slope to 3Months Brent Avg price Exhibit 13: Spot LNG price - Softer on a Global LNG glut
Source: Industry data, RSec Research estimates, Bloomberg, Reuters
12.6%
10.5%11.5%
15.0%
13.5%
11.4%
13.8% 14.0%
10.0%
6.7%7.2%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
4QFY
17
1QFY
18
2QFY
18
3QFY
18
4QFY
18
1QFY
19
2QFY
19
3QFY
19
4QFY
19
1QFY
20
2QFY
20
Mahanagar Gas Institutional Equity Research
6
Target Price: Rs956Oil & Gas | India
CMP* (Rs) 1064
Upside/ (Downside) (%) (10)
Bloomberg Ticker MAHGL IN
REDUCE
Exhibit 14: Forward spot LNG prices < $5/mmbtu for CY2020 Exhibit 15: Brent forward price; Backwardation range $67-$63/bl
Source: Industry data, RSec Research estimates, Bloomberg, Reuters
Exhibit 16: MAHGL’s total gas cost and EBITDA per scm Exhibit 17: MAHGL’s price realisation
Source: Company, RSec Research estimates, Industry data
3QFY20 outlook - EBITDA/scm likely to drop to Rs9/scmMAHGL reduced CNG/PNG household prices by Rs2.04/Rs1.19 in Oct’19 on the back of Government announced a 12.5% reduction in APM gas prices to $3.23/mmbtu from $3.69/mmbtu. Reduction in APM gas prices suggest MAHGL’s gas cost should fall by Rs 0.84/scm (based on 65% APM sourcing) and CNG/ PNG price reduction should drag MAHGL’s overall price realisation by Rs 1.66/scm. This implies CNG/PNG household price cut is higher than required. Rise in spot LNG prices to $5.8/mmbtu, likely to put pressure on PNG industrial product realisation. In 3QFY20, We expect MAHGL’s EBITDA/scm of ~Rs9/scm compared to Rs 9.9/scm in 2QFY20.
PNG industrial volume growth to slow down and price realisation to remain under pressure Taloja MIDC is likely to curtail 50% water supply to industrial units after the industries failed to abide by the Supreme Court (SC) deadline of November 30 to pay Rs180mn towards the setting-up of an upgraded five-star Common Effluent Treatment Plant (CETP) in the area. Water supply cut likely to impact on production from industrial units which consumes PNG industrial product. Further, in 2QFY20, few industrial units have changed the PNG consumption pattern (source: 2QFY20- Concall) and addition of any water supply cut will likely impact on PNG industrial sales volume growth. Fall in HSFO prices are likely to pressurise on PNG industrial price realisation in 3Q & 4QFY20.
10.8 11.3 10.3 11.1
9.9 9.5 10.7
11.6 11.2 13.1
14.1 13.6 12.9 13.7 13.0
6.7 6.8 7.1 6.9 8.7 8.0 8.0
7.0 8.1 8.1 8.8
7.9
10.3 9.9 8.9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Q3F
Y19
Q4F
Y19
1QFY
20
2QFY
20
3QFY
20E
Rs/scm
Gas cost/SCM EBITDA/SCM
21.3 21.8 21.4 22.3 22.7 21.523.1 23.3 23.7
25.627.6 26.7 28.0 28.4
26.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Q3F
Y19
Q4F
Y19
1QFY
20
2QFY
20
3QFY
20E
Rs/scm
Price Realisation
Mahanagar Gas Institutional Equity Research
7
Target Price: Rs956Oil & Gas | India
CMP* (Rs) 1064
Upside/ (Downside) (%) (10)
Bloomberg Ticker MAHGL IN
REDUCE
Profit & Loss account
Y/E March (Rs mn) FY19 FY20E FY21E FY22E
Net Sale of Natural Gas 30,568 30,825 32,621 34,975
Total Operating Income 30,568 30,825 32,621 34,975
Cost of natural gas and traded items
13,992 15,687 16,710 18,881
Excise Duty on Sale of CNG 2,657 - - -
Other expenses 5,065 4,911 5,080 5,259
Total expenses 21,713 20,599 21,790 24,140
EBITDA 8,855 10,226 10,831 10,835
EBITDA Margins (%) 29% 33% 33% 31%
Other income 777 956 1084 1360
Finance costs 3 37 39 0
Depreciation 1259 1370 1485 1559
PBT 8,369 9,776 10,391 10,636
Total Tax Expense 2,905 1,955 2,598 2,659
PAT 5,464 7,821 7,793 7,977
PAT/scm 5.1 7.0 6.8 6.7
Net Profit margins (%) 18% 25% 24% 23%
EPS (Rs) 55.3 79.2 78.9 79.9
DPS (Rs) 20.0 28.6 28.5 28.9
Shares outstanding (mn) 98.8 98.8 98.8 99.8
Mahanagar Gas Institutional Equity Research
8
Target Price: Rs956Oil & Gas | India
CMP* (Rs) 1064
Upside/ (Downside) (%) (10)
Bloomberg Ticker MAHGL IN
REDUCE
Balance sheet
Y/E March (Rs mn) FY19 FY20E FY21E FY22E
Share capital 988 988 988 988
Reserves and surplus 23,001 27,516 32,016 36,621
Share holders fund 23,989 28,504 33,003 37,609
Other non current liabilities 2,210 2,210 2,210 2,210
Total Non current liabilities 2,210 2,210 2,210 2,210
Trade payable 1,524 1,677 1,786 2,019
Security deposits 5,179 5,179 5,179 5,179
Other current liabilities 1,508 1,558 1,587 1,624
Total current liabilities 8,212 8,415 8,552 8,822
Total Liabilities 34,410 39,128 43,765 48,640
Fixed assets 21,331 22,162 22,878 23,319
Other non current asset 1,321 1,321 1,321 1,321
Total Non current asset 22,652 23,483 24,199 24,640
Current investments 6,540 6,540 6,540 6,540
Inventories 191 366 390 440
Trade Receivables 995 1,157 1,225 1,313
Cash and bank balances 2,988 6,539 10,369 14,663
Other current asset 1,044 1,044 1,044 1,044
Total current asset 11,759 15,646 19,567 24,000
Total Assets 34,410 39,128 43,765 48,640
Mahanagar Gas Institutional Equity Research
9
Target Price: Rs956Oil & Gas | India
CMP* (Rs) 1064
Upside/ (Downside) (%) (10)
Bloomberg Ticker MAHGL IN
REDUCE
Cash Flow Statement
Y/E March (Rs mn) FY19 FY20E FY21E FY22E
PBT 8,369 9,776 10,391 10,636
Depreciation 1,259 1,370 1,485 1,559
Others (495) (920) (1,045) (1,360)
Cash flow from operating activities 9,134 10,226 10,831 10,835
Changes in inventories 49 (175) (24) (51)
Change in receivable (115) (162) (67) (88)
Change in payable 432 153 109 232
Change in other current liabilities 748 50 28 37
others (695) - - -
Net Cash flow from operating activities after WC
9,552 10,093 10,877 10,965
income taxes paid (2,708) (1,955) (2,598) (2,659)
Net Cash flow from operating activities 6,844 8,137 8,280 8,306
Cash flow from investing activities (4,383) (1,245) (1,117) (640)
Cash flow from financing activities (2,346) (3,342) (3,333) (3,372)
Net change in cash 115 3,550 3,830 4,294
Key Ratio
Y/E March FY19 FY20E FY21E FY22E
Valuation Ratio (x)P/E 19.4 13.6 13.6 13.4
P/CEPS 16.9 11.9 11.9 11.6
P/BV 4.4 3.7 3.2 2.8
Dividend yield (%) 2% 3% 3% 3%
EV/EBITDA 11.1 9.3 8.4 8.1
BVPS 243 289 334 377
Per Share Data (Rs)EPS 55.3 79.2 78.9 79.9
Cash EPS 63.6 90.3 90.2 92.6
DPS 20.0 28.6 28.5 28.9
Returns (%)RoCE 23.6 28.8 24.6 21.7
RoE 24.3 29.8 25.3 22.6
Turnover ratios (x)Asset Turnover (Gross Block) 1.2 1.1 1.3 1.3
Inventory (days) 5.0 8.5 8.5 8.5
Receivables (days) 11.9 13.7 13.7 13.7
Payables (days) 39.8 39.0 39.0 39.0
Mahanagar Gas Institutional Equity Research
10
Target Price: Rs956Oil & Gas | India
CMP* (Rs) 1064
Upside/ (Downside) (%) (10)
Bloomberg Ticker MAHGL IN
REDUCE
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Rating GuidesRating Expected absolute returns (%) over 12 monthsBUY >10%
HOLD -5% to 10%
REDUCE >-5%
PLEASE CLICK HERE FOR PREVIOUS REPORTS
Rating History
Date Reco CMP TP
13-Nov-19 HOLD 1003 956
12-Aug-19 HOLD 785 761
12-July-19 REDUCE 807 761
11-Jun-19 REDUCE 887 803
10-May-19 REDUCE 889 803
26-Apr-19 REDUCE 967 805