1. At a Glance – Mumbai Runs on Gas, Literally
If Mumbai had a fuel sponsor, it would be Mahanagar Gas Ltd. This is the company quietly pumping compressed discipline into your auto-rickshaw, bus, cab, home kitchen, hotel tandoor, and half the industrial estates around the city.
Current price sits at ₹1,170, market cap at ₹11,557 Cr, P/E at a modest ~11.9, ROCE a solid 22.9%, and dividend yield 2.56%. Sounds boring? Wait till you see the cash flows.
Q3 FY26 numbers show ₹2,058 Cr revenue (+17.1% YoY) but PAT slipped 10.4% YoY to ₹202 Cr. Volumes are rising, pipelines are expanding, households are connecting — yet profits wobble because the government keeps playing musical chairs with gas allocation prices.
This is a monopoly-like business with razor-sharp margins, political interference, insane operating leverage, and enough free cash flow to make PSU investors emotional. Question is: is MGL a sleepy dividend uncle stock or a misunderstood compounder stuck in a policy soap opera?
2. Introduction – The Gas Pipeline You Never Think About
Nobody wakes up and says, “Wow, city gas distribution is exciting.” But MGL is the reason Mumbai’s air is marginally less terrible and your auto doesn’t run on vibes.
This company operates in one of India’s densest, richest, and most gas-hungry urban clusters. Once pipelines are laid, competition is basically theoretical. You don’t switch PNG providers like mobile SIMs — you’re married for life.
MGL’s game is simple:
- Lay pipelines (painful upfront capex)
- Lock customers (forever)
- Print cash (politely, every quarter)
- Pay dividends (consistently)
Yet markets treat it like a utility with zero growth because:
- APM gas prices are controlled
- Allocation keeps changing
- EV hype scares people
- PSU tag gives PTSD
But here’s the twist:
volumes are growing, CNG demand is exploding, LNG is creeping in, and biogas + EV adjacencies are being explored. This is not a dying dinosaur — it’s a regulated cash cow learning new tricks.
3. Business Model – WTF Do They Even Do?
Think of MGL as Mumbai’s invisible fuel landlord.
Segment 1: Automotive CNG (69% of Q2 FY25 volumes)
This is the money machine.
- 347 CNG stations
- ~10 lakh vehicles using MGL gas
- 2,346 buses (BEST, MSRTC, etc.)
- Sales volume jumped from 2.114 MMSCMD (FY22) to 2.886 MMSCMD (Q2 FY25)
Every time petrol prices spike, autos quietly thank MGL. CNG adoption isn’t ideology — it’s economics.
Segment 2: PNG (30%)
- Domestic PNG: 24.9 lakh households connected
- Industrial & Commercial PNG: 4,769 clients
Hotels, hospitals, factories — once connected, they rarely disconnect. Switching costs are high, reliability matters, and gas is cleaner than alternatives.
Segment 3: LNG & Others (1%)
Still tiny, but interesting.
- First LNG station at Savroli
- Volumes jumped from <700 kg/day to ~4,000 kg/day
- 6 new LNG stations planned
This is MGL flirting with long-haul trucking and future mobility.
So yeah, boring business. But boring businesses with
