MGL - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.3

📊 Fundamental Analysis Summary

Mahanagar Gas Ltd (MGL) is a fundamentally strong player in the city gas distribution space

ROE (18.9%) & ROCE (24.3%): Excellent capital efficiency and profitability.

P/E Ratio (12.8): Undervalued compared to industry average (18.5), indicating a potential value buy.

Dividend Yield (2.16%): Attractive for income-focused investors.

Debt-to-Equity (0.03): Virtually debt-free — strong financial health.

EPS (₹108): Solid earnings base.

Quarterly PAT Growth: 10% QoQ growth, showing resilience despite sectoral challenges.

📈 Technical & Valuation Insights

Current Price: ₹1,389

DMA 50/200: ₹1,432 / ₹1,400 — price below both, indicating short-term weakness.

RSI (37.9): Near oversold zone — potential reversal opportunity.

MACD (-8.05): Bearish momentum, but flattening.

Volume: Slightly below average — no panic selling.

🎯 Ideal Entry Price Zone

Based on valuation and technical indicators

Fair Entry Zone: ₹1,325–₹1,375

Near support levels and below DMA 200

Offers margin of safety with upside potential toward ₹1,680–₹1,800

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🧭 Exit Strategy / Holding Period

If you already hold MGL

Holding Period: 3–5 years

Strong fundamentals and dividend yield make it suitable for long-term compounding

Structural growth in CNG/PNG demand in urban India supports future earnings

Exit Strategy

Partial Exit near ₹1,750–₹1,800 if valuation stretches beyond PE of 18+

Full Exit only if

ROE drops below 12%

Regulatory headwinds (e.g., APM gas cuts) persist beyond 2–3 quarters

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PEG ratio rises above 1.2 (currently not available but implied to be <1)

Watchlist Triggers

Gas allocation changes (APM cuts have impacted margins recently

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Removal from F&O segment (effective August 1, 2025) may reduce speculative interest

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Price hikes to offset margin pressure — monitor for implementation

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🧠 Final Verdict

MGL is a value-oriented, dividend-yielding stock with strong fundamentals and low debt. While short-term headwinds exist due to gas allocation changes, the long-term outlook remains positive. Ideal for conservative investors seeking stability and moderate growth.

Would you like a comparison with other city gas distributors like IGL or Gujarat Gas?

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trendlyne.com

2

bing.com

3

upstox.com

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