IGL, MGL Stock Surge on Positive Analyst Ratings

Upward Trajectory:

Shares of Indraprastha Gas Limited (IGL) and Mahanagar Gas Limited (MGL) witnessed a significant surge on Tuesday, September 17th, 2024, following positive analyst ratings from UBS. IGL climbed over 6%, while MGL impressively reached a 52-week high, driven by strong volume growth prospects.

IGL’s Transformation:

UBS upgraded IGL’s stock from “sell” to “buy,” reflecting a shift in their outlook.
The target price was substantially raised from Rs 400 to Rs 700 per share, indicating a bullish stance.
UBS highlighted IGL’s robust near-term fundamentals, bolstered by promising opportunities for inorganic growth.

Volume Growth Engine:

UBS forecasts a significant improvement in IGL’s volume growth, projecting a rise from 4% year-on-year in FY24 to a stellar 8.2% compound annual growth rate (CAGR) between FY24 and FY27.
Key drivers for this growth spurt include:
- Expansion of infrastructure
- Entry into new geographical areas
Additionally, UBS believes that potential mergers and acquisitions (M&A) could further propel IGL’s value, even though these haven’t been factored into the current price.

MGL’s Continued Ascendancy:

MGL shares gained around 6%, reaching a 52-week high.
While UBS maintained its “buy” rating on MGL, the target price was significantly revised upwards from Rs 1,600 to Rs 2,400 per share, reflecting increased optimism.
The brokerage expects both organic and inorganic volume growth to surpass expectations, driven by:
- Infrastructure development
- Expansion of the CNG fleet
UBS has also raised its EBITDA per scm forecast for FY25-27 by 6-11% to Rs 12.1-12.3/scm, acknowledging MGL’s effective pricing strategies.
Similar to IGL, potential M&A opportunities hold the potential for further value creation for MGL.

Market Performance:

At the time of this report (around 10:37 am IST), IGL’s stock was trading 5.4% higher at Rs 558.90 on NSE.
MGL was up 6.3% at Rs 1,936.65, reflecting strong investor confidence.
Year-to-date, IGL and MGL have rallied an impressive 33% and 60% respectively, significantly outperforming the Nifty’s returns of 16%.

Looking Back:

Over the past 12 months, IGL has witnessed a gain of 19%, while MGL has zoomed by a remarkable 83%, highlighting the significant growth potential in the city gas distribution sector.

Disclaimer:

This article is based on information publicly available on Moneycontrol.com and is intended for informational purposes only. It does not constitute financial advice, and you should consult with a qualified financial advisor before making any investment decisions.