⚡ At a Glance
Mahanagar Gas is a city gas distributor with legendary margins, 2% dividend yield, and near-zero debt. But slowing profit growth, FII exits, and zero geographical expansion raise the big question – is this gas giant running on fumes or still a cash cow?
1. 🎬 Introduction with Hook
Mumbaikars know MGL. It’s the reason their kitchen stoves light up, cabs run on CNG, and gas bills don’t burn a hole in the pocket (well, most of the time). But investors? They’ve had a more toxic relationship with the stock lately.
Once a steady dividend payer and high-margin hero, MGL’s EPS has dropped 19% YoY, foreign investors are running for the hills, and Adani Total Gas is breathing down its pipelines.
So what gives? Let’s leak the numbers.
2. 🏭 WTF Do They Even Do? (Business Model)
- Sector: City Gas Distribution (CGD)
- Service Areas: Mumbai, Thane, Navi Mumbai, Raigad
- Segments:
- PNG – Piped Natural Gas to households & industries
- CNG – Compressed Natural Gas for autos & transport
MGL’s business is pretty much recession-proof. Whether Sensex is at 30K or 80K, Mumbai’s kitchens still need gas. But the problem? Geographic stagnation. Unlike IGL (Delhi) and Gujarat Gas (everywhere else), MGL hasn’t added new high-growth zones in years.
3. 💸 Financials Overview – Profits, Margins, ROE
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 6,299 | 6,245 | 6,924 |
| Net Profit (₹ Cr) | 790 | 1,289 | 1,045 |
| EBITDA Margin | 19% | 30% | 22% |
| ROCE | 27% | 37% | 24% |
| ROE | 22% | 22% | 19% |
| EPS (₹) | 79.98 | 130.5 | 105.78 |
🧠 FY24 was a bumper gas year due to softening spot LNG prices. But FY25 is showing margin normalization — net profit fell 19%, and EBITDA margin shrank from 30% to 22%.
4. 📊 Valuation – Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹1,447 |
| PE Ratio | 13.7x |
| Book Value | ₹596 |
| Price / Book | 2.43x |
| Dividend Yield | 2.07% |
| Fair Value Range 🧮 | ₹1,500 – ₹1,750 (based on 14–16x sustainable EPS of ₹105–110) |
🔍 Peer Check:
| Company | PE | ROCE | PAT FY25 (₹ Cr) |
|---|---|---|---|
| Adani Total | 108x | 17% | 655 |
| IGL | 17x | 21% | 1,713 |
| Gujarat Gas | 27x | 19% | 1,148 |
| MGL | 13.7x | 24% | 1,045 |
✅ Verdict: MGL is clearly the cheapest among peers on PE & ROCE, but the discount is for a reason – low growth visibility.
5. 🔥 What’s Cooking – News, Triggers, Drama
Positives:
- Crude-linked LNG prices still remain soft in 2025
- High dividend yield = defensive attraction
- Govt push for CGD expansion could benefit indirectly
Negatives:
- Flat volume growth
- No new geographical license wins
- IGL, Gujarat Gas, Adani Total eating market share in new cities
Also… FIIs have been cutting stake every quarter since June 2024. They’re now down to 23.8% (from 34%+).
6. 📉 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Borrowings | ₹164 Cr |
| Cash & Equivalents | ₹1,368 Cr |
| Net Debt | -₹1,204 Cr (cash surplus) |
| Equity Capital | ₹99 Cr |
| Reserves | ₹5,791 Cr |
💡 MGL is a cash-rich fortress. It doesn’t need debt. In fact, it needs ideas on how to use its cash better.
7. 💵 Cash Flow – Sab Number Game Hai
| Metric | FY24 | FY25 |
|---|---|---|
| CFO (Op. Cash Flow) | ₹1,563 Cr | ₹1,368 Cr |
| CFI (Investing Out) | -₹1,267 Cr | -₹1,001 Cr |
| CFF (Dividend etc.) | -₹312 Cr | -₹336 Cr |
| Net Cash Flow | -₹15 Cr | +₹32 Cr |
📦 Core business still generates ₹1,300–1,500 Cr annually. Even if profits shrink, CFO remains sticky.
8. 🧮 Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROCE | 24.5% |
| ROE | 18.9% |
| Debt/Equity | ~0.03x |
| Working Capital | Negative (supplier-funded) |
| Inventory Days | 4 |
| Debtor Days | 18 |
| Cash Conversion | -12 days |
🧠 These ratios are chef’s kiss for a utility stock. No working capital stress, negative CCC, and high return metrics.
9. 💸 P&L Breakdown – Show Me the Money
| Line Item | FY25 |
|---|---|
| Revenue | ₹6,924 Cr |
| COGS + Op. Expenses | ₹5,414 Cr |
| EBITDA | ₹1,510 Cr |
| EBITDA Margin | 22% |
| Other Income | ₹184 Cr |
| Depreciation | ₹306 Cr |
| Interest | ₹13 Cr |
| PBT | ₹1,374 Cr |
| Tax (24%) | ₹329 Cr |
| PAT | ₹1,045 Cr |
| EPS | ₹105.78 |
Other income is a chunky 12%+ of PBT – this is what you get when you sit on ₹1,300 Cr cash.
10. 🧑💼 Shareholding, Promoters & KMPs
| Category | Mar 2025 |
|---|---|
| Promoters | 32.50% |
| Government | 10.00% |
| FIIs | 23.76% ⬇ |
| DIIs | 23.82% ⬆ |
| Public | 9.92% |
🎙️ CEO: Mahesh V. Iyer (ex-GAIL)
📉 FII stake falling → retail is still underweight.
11. 🎯 EduInvesting Fair Value Range™
- Base EPS: ₹105
- Sustainable PE: 14–16×
- Fair Value Range: ₹1,500 – ₹1,750
- Current Price: ₹1,447
📉 It’s near lower end of fair value. Not a screaming buy, but not a trap either.
12. 🧠 EduInvesting Verdict™
✅ Pros:
- Cash-rich, no debt
- Highest ROCE in peer group
- 2% dividend yield = stable cash cow
- Utility-like predictability
🚫 Cons:
- Flat volumes
- Margin normalization
- FIIs losing interest
- No new geographies
Final Words:
This is a gas stock, not a rocket stock. If you’re expecting multibagger returns, go play with PSU banks or ethanol stocks.
But if you want to park money in a low-risk, cash-flow machine, MGL is… sabka gaswala dost.
✍️ Written by Prashant | 📅 June 26, 2025
Tags: Mahanagar Gas, CGD stocks, Dividend, City gas, Utilities, PSU, IGL, Gujarat Gas, Adani Total Gas, Mumbai
