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Informist, Thursday, Jul. 30, 2026

By Durgesh Nandan

MUMBAI – Mahanagar Gas Ltd.'s June quarter net profit is expected to plunge on year despite a slight increase in its revenue for the June quarter as costs rose sharply due to the higher gas prices caused by the war in West Asia, according to brokerages tracking the company. 

Mahanagar Gas is expected to report a net profit of INR 1.37 billion, down 57% on year but up 5% sequentially, according to the average of estimates from 14 brokerages. The highest estimate for the company's net profit is INR 2.04 billion from Emkay Global Financial Services Ltd. while the lowest is INR 897 million from Nuvama Wealth Management Ltd.

The company is likely to post revenues of INR 22.42 billion, up 7.7% on year and up over 9% sequentially, according to the estimates. The highest estimate for the top line is INR 23.32 billion from Elara Securities (India) Pvt Ltd. while the lowest is INR 20.9 billion from ICICI Securities Ltd.

While most brokerages expect the company's net profit to fall due to the increased cost of procurement, Emkay and PhillipCapital (India) Pvt. Ltd. expect the bottom line to rise on the back of an improvement in the earnings before interest, tax, depreciation, and amortisation margin. Better realisations after the price hike are expected to support the company's revenue and partly offset the impact of higher input costs, Emkay and Nomura said.

"MGL is expected to report moderate volume growth of 6% yoy, largely owing to lower I/CPNG (industrial and commercial piped natural gas) volumes" Emkay said. "However, unit EBITDA is likely to improve 33% qoq (quarter on quarter) to Rs 8.2/scm (INR 8.2/standard cubic metre), driven by higher realizations and lower opex, resulting in a 36% qoq (quarter-on-quarter) uptick in EBITDA to Rs 3.5bn (INR 3.5 billion)." It said.

Most brokerages expect gas volumes to grow 6-9% year-on-year. Higher sales of compressed natural gas and piped natural gas are likely to support the revenue growth despite pressure on margins. 

Lower allocation of gases under the government's Administered Price Mechanism reduced the availability of cheaper domestic gas which forced the company to procure more expensive imported liquified petroleum gas, increasing its average cost of gas, and this contracted the margins. The company increased prices during the quarter after the government allowed gas prices to be raised. However, these factors are unlikely to fully compensate for the sharp increase in procurement cost, brokerages said.

The company's EBITDA is expected to be INR 2.65 billion, down over 45% year-on-year for the June quarter. The highest estimate for the EBITDA is INR 3.55 billion from Emkay while the lowest is INR 2.13 billion from Nuvama. However, Emkay said, lower operating costs and higher realisations will help the company to improve its EBITDA on a sequential basis.

The EBITDA margin is expected to decline due to several factors such as higher procurement prices and depreciation of the Indian rupee which led to further increase in costs. "Gross margins for MGL (Mahanagar Gas) are likely to decline by INR 2.6 per scm (standard cubic meter) YoY (year-on-year) due to higher gas costs," ICICI Securities said.

After two months from the start of the war in West Asia, the company discontinued all support schemes and subsidies it used to provide to cope with the pressure of high costs and then raised the selling price of CNG and domestic piped natural gas in Mumbai and nearby areas to INR 86 per kg and INR 52 per kilogram respectively.

Mahanagar Gas is a city gas distribution company. It supplies CNG to vehicles and piped natural gas to households, commercial establishments and industries. It mainly operates in Mumbai, Thane, Raigad, and nearby areas.

The company will release its earnings for the June quarter on Thursday. Investors will watch for the management's commentary on the sales volumes growth, EBITDA per standard cubic metres, realisations, impact of rupee depreciation, and gas costs in future and expansion in Raigad.

At 1038 IST, shares of Mahanagar Gas were traded at INR 1,115.40 on the National Stock Exchange, up nearly 1%. The stock has shed nearly 5% since the company declared its March quarter earnings on May 7.

Of the 13 brokerage reports available on the company with Informist, 11 have a "buy" or equivalent recommendation on the stock with an average target price of INR 1,358, representing an upside of nearly 23% from the current market price. One has a "hold" or equivalent recommendation on the stock with the average share price of INR 1,175, and one has a "sell" or equivalent recommendation with an average target price of INR 1,084, which is nearly 2% down from the current market market price.

The following are the Apr-Jun earnings estimates for Mahangar Gas from 14 brokerages, in descending order of the estimate of net profit, in INR million:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Pankaj Aher

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