1. At a Glance
Mahanagar Gas just posted Q1 FY26 results that didn’t disappoint—revenue up 24%, profit at ₹324 Cr. But with falling margins vs FY23 and a 13% drop in share price over the last year, investors are wondering—has this cash-rich gas giant lost some spark?
2. Introduction with Hook
Think of MGL like that uncle who’s always loaded with cash, lives modestly, and doesn’t show off—until someone tries to mess with his turf. Mumbai’s favorite gas distributor is back in action with double-digit growth, a monster balance sheet, and an ever-growing pipe network under its belt.
- Q1 FY26 Revenue: ₹2,198 Cr (+24% YoY)
- Q1 FY26 PAT: ₹324 Cr (vs ₹285 Cr YoY)
- Dividend Yield: 2% and zero net debt
So why is the stock still down 25% from its 52-week high? Let’s break this gas giant down.
3. Business Model (WTF Do They Even Do?)
MGL operates the City Gas Distribution (CGD) business—supplying CNG to vehicles and PNG to homes, commercial kitchens, and industries.
Key Segments:
- CNG: ~65% of volume, supplied via ~330+ stations
- PNG – Domestic: For 2M+ households
- PNG – Industrial/Commercial: Major revenue driver, ~20–25%
Area of Operation: Mumbai, Thane, Navi Mumbai, Raigad (Monopoly in many zones)
Regulated Business = Stable cash flows + Tariff visibility
4. Financials Overview
Q1 FY26 Snapshot (₹ Cr):
| Metric | Q1 FY26 | YoY Change |
|---|---|---|
| Revenue | 2,198 | +24% |
| Operating Profit | 485 | +16% |
| PAT | 324 | +13.7% |
| OPM | 22.1% | –2% YoY |
| EPS | ₹32.83 | Up |
TTM Revenue: ₹7,310 Cr
TTM PAT: ₹1,085 Cr
Market Cap: ₹14,658 Cr
5. Valuation
| Metric | Value |
|---|---|
| CMP | ₹1,485 |
| EPS (TTM) | ₹109.81 |
| P/E | 13.5x |
| Book Value | ₹596 |
| P/B | 2.5x |
Fair Value Range
| Method | FV Range (₹) |
|---|---|
| DCF (Conservative) | ₹1,400–1,600 |
| Historical P/E (15–18x) | ₹1,650–1,975 |
| Peer Average EV/EBITDA | ₹1,500–1,750 |
Verdict: Currently undervalued vs peers. At 13.5x earnings, it’s trading like a utility, not a high-growth CGD story.
6. What’s Cooking – News, Triggers, Drama
- Legal Disputes: Ongoing, no provisions made in Q1 FY26
- Raigad Expansion: Slow but steady rollout in rural Maharashtra
- Alternative Fuel Threat: EV adoption in metro cities = long-term headwind
- High FII & DII Holding: Over 47% institutional holding (combo of conviction + exit risk)
- Merger Rumors?: Management remains hush-hush, but energy sector consolidation always looms
7. Balance Sheet
| Metric | FY25 |
|---|---|
| Equity Capital | ₹99 |
| Reserves | ₹5,791 Cr |
| Borrowings | ₹164 Cr |
| Total Assets | ₹8,204 Cr |
| Cash + Investments | ₹1,740 Cr |
Debt? Basically negligible.
Leverage? What leverage?
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net Cash |
|---|---|---|---|---|
| FY23 | ₹969 | ₹–649 | ₹–285 | ₹35 |
| FY24 | ₹1,563 | ₹–1,267 | ₹–312 | ₹–15 |
| FY25 | ₹1,368 | ₹–1,001 | ₹–336 | ₹32 |
Conclusion: Operating cash flow is rock solid; large capex on infra expansion eats into free cash. Healthy, if not flashy.
9. Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | 18.9% |
| ROCE | 24.5% |
| OPM | 22% |
| Debtor Days | 18 |
| Inventory Days | 4 |
| CCC | –12 days |
Efficiency = Underrated King
Negative working capital + high margin = cash cow.
10. P&L Breakdown – Show Me the Money
| FY | Revenue | OPM % | PAT | EPS |
|---|---|---|---|---|
| FY23 | ₹6,299 | 19% | ₹790 | ₹79.98 |
| FY24 | ₹6,245 | 30% | ₹1,289 | ₹130.5 |
| FY25 | ₹6,924 | 22% | ₹1,045 | ₹105.8 |
Note: FY24 saw windfall margins due to lower gas prices; FY25 normalized.
11. Peer Comparison
| Company | CMP | P/E | ROCE % | OPM % | Div Yld | EPS |
|---|---|---|---|---|---|---|
| Mahanagar Gas | ₹1,485 | 13.5x | 24.5% | 22% | 2.02% | ₹109.8 |
| IGL | ₹212 | 17.4x | 21.4% | 13.2% | 2.13% | ₹16.9 |
| Gujarat Gas | ₹470 | 28.2x | 19.1% | 11.4% | 1.18% | ₹16.6 |
| Adani Total Gas | ₹647 | 108x | 17.4% | 22.7% | 0.04% | ₹5.9 |
Verdict: MGL wins on fundamentals. Adani wins only if you’re betting on gas futures and Gautam bhai.
12. Miscellaneous – Shareholding, Promoters
| Category | Q1 FY26 |
|---|---|
| Promoters | 32.5% |
| FIIs | 25.48% |
| DIIs | 22.52% |
| Government | 10% |
| Public | 9.5% |
| Total Holders | 1.66 Lakh |
Insight: Public holding at all-time lows. Smart money loading up?
13. EduInvesting Verdict™
MGL is that rare stock where boring is beautiful:
- Monopoly distribution
- Zero net debt
- 2%+ yield
- Strong margins
- Reasonable valuation
If you’re hunting for a value pick with cash flow karma and ESG-positive vibes—MGL’s pipeline is worth watching. Just don’t expect fireworks—it’s a steady burn, not an explosion.
Metadata
– Written by EduInvesting Team | 22 July 2025
– Tags: Mahanagar Gas, Q1 FY26, CGD, City Gas, Natural Gas, Mumbai, PNG, CNG
