MGL - Mahanagar Gas

📊 NSE: MGL 🏢 Miscellaneous 📅 Last Updated: 12/14/2025 9:26

💰 Financial Performance

Revenue Growth by Segment

CNG segment volumes grew to represent 71.9% of total sales in FY2025, supported by a 6.82% sequential volume increase in H1 FY2026 to 4.52 mmscmd. PNG-Domestic contributes ~13-16% of volumes, while PNG-Industrial/Commercial accounts for ~16%. Operating income rose 14% YoY in H1 FY2026 to INR 4,133.4 Cr, compared to INR 3,560.2 Cr in FY2022 and INR 6,299.3 Cr in FY2023.

Geographic Revenue Split

Primary revenue is generated from Greater Mumbai (GA1), Expansion Areas (GA2), and Raigad (GA3). Expansion into Ratnagiri, Latur, Osmanabad (Maharashtra) and Chitradurga/Davanagere (Karnataka) via the UEPL acquisition adds ~37,400 Sq Km of operational area to the portfolio.

Profitability Margins

Net Profit Margin (NPM) stood at 12% in H1 FY2026 with a PAT of INR 512.5 Cr. Return on Net Worth declined from 27.80% in FY2024 to 18.94% in FY2025, while Operating Profit Margin fell from 20.64% to 15.09% in the same period due to higher gas procurement costs following reduced APM allocations.

EBITDA Margin

EBITDA margin was 20% in H1 FY2026 (OPBDITA of INR 838.5 Cr). EBITDA per scm fluctuated from INR 9.5 in FY2023 to a peak of INR 16.8 in Q1 FY2024, before settling at INR 10.13 in H1 FY2026 and INR 10.18 for FY2025, reflecting the impact of higher input gas costs.

Capital Expenditure

Planned Capex for FY2026 is INR 1,100 Cr to INR 1,200 Cr, with INR 900-1,000 Cr allocated to MGL's 3 GAs and INR 150-200 Cr for UEPL's 3 GAs. This is an increase from previous annual outlays of INR 600-800 Cr.

Credit Rating & Borrowing

Maintains a robust credit profile with an [ICRA]AAA (Stable) rating. The company is currently debt-free with nil borrowing costs, funding its large-scale expansions entirely through internal accruals and a cash balance of INR 1,298.7 Cr as of September 2025.

⚙️ Operational Drivers

Raw Materials

Natural Gas (comprising Administrative Price Mechanism (APM) gas, High Pressure High Temperature (HPHT) gas, and Spot LNG) represents the primary cost, with APM gas prices capped at $6.5/mmbtu.

Import Sources

Sourced domestically from nomination fields (APM) and HPHT fields; shortfall is met through imported Spot LNG sourced from global markets via term and spot contracts.

Key Suppliers

GAIL (India) Limited is the primary supplier and promoter (32.5% stake). Other sources include New Well Gas and HPHT field operators.

Capacity Expansion

Current infrastructure serves ~2.83 million domestic PNG connections and ~5,100 I&C customers. Planned expansion includes adding 200 km of pipeline network and developing new CNG stations across various models in FY2026.

Raw Material Costs

Gas costs increased significantly in FY2025 due to a reduction in APM allocation, forcing the company to procure costlier alternative sources. Operating expenses reached INR 6.73/scm in H1 FY2026.

Manufacturing Efficiency

Maintained Zero Loss Time Injury (LTI) for FY2024-25. Operational efficiency is driven by digital interventions and tailor-made marketing campaigns to manage demand effectively.

Logistics & Distribution

Distribution is managed via a vast pipeline network; the contiguity of the Ratnagiri GA to the Raigad GA is expected to result in substantial logistics savings and enhanced last-mile connectivity.

📈 Strategic Growth

Expected Growth Rate

6.82%

Growth Strategy

Growth will be achieved through the acquisition of UEPL (INR 531-562 Cr) to enter Maharashtra and Karnataka markets, a JV with Baidyanath LNG for long-haul truck stations, and an aggressive push to add 200 km of pipeline and new CNG stations.

Products & Services

Compressed Natural Gas (CNG) for vehicles, Piped Natural Gas (PNG) for domestic cooking, and PNG for Industrial and Commercial (I&C) heating and power applications.

Brand Portfolio

Mahanagar Gas Limited (MGL), Unison Enviro Private Limited (UEPL).

New Products/Services

LNG for long-haul heavy-duty trucks via the Baidyanath LNG JV, aiming to capture the cleaner freight transportation market.

Market Expansion

Targeting semi-urban and rural areas in Ratnagiri, Latur, Osmanabad, Chitradurga, and Davanagere following the UEPL acquisition.

Market Share & Ranking

MGL is one of the top-5 City Gas Distribution (CGD) players in India, maintaining a dominant position in the Mumbai Metropolitan Region.

Strategic Alliances

Joint Venture with Baidyanath LNG Private Limited; technology collaboration with Nawgati for digital CNG retail queue management.

🌍 External Factors

Industry Trends

The industry is shifting toward cleaner fuels with a national target of 18,000 CNG stations by 2032. MGL is positioning itself by diversifying into LNG for trucking and expanding its geographic footprint beyond Mumbai.

Competitive Landscape

Faces competition from alternative liquid fuels like furnace oil and bulk LPG in the industrial segment, and from petrol/diesel in the transport segment.

Competitive Moat

Moat is based on first-mover advantage and extensive pipeline infrastructure in Mumbai (GA1). While marketing exclusivity has expired, the high cost and operational complexity for new entrants to lay parallel networks provide a durable 'infrastructure exclusivity' moat.

Macro Economic Sensitivity

Highly sensitive to global crude oil prices, as the APM gas price ceiling is linked to crude, and alternative fuels (petrol/diesel) prices dictate CNG demand levels.

Consumer Behavior

Increasing vehicle registrations in CNG passenger and commercial segments due to the cost advantage over petrol/diesel supports long-term demand.

Geopolitical Risks

Global energy supply disruptions impact spot LNG availability and pricing, directly affecting the 28-30% of volumes not covered by APM gas.

⚖️ Regulatory & Governance

Industry Regulations

Regulated by PNGRB; subject to common carrier regulations where 20% of pipeline capacity must be offered to third parties if marketing exclusivity expires.

Environmental Compliance

Focus on reducing Scope 2 emissions and sustainable water management through STPs; Zero LTI record indicates high safety compliance.

Taxation Policy Impact

Standard corporate tax rates apply; the discontinuation of LPG subsidies by the Government has benefited MGL's PNG-Domestic segment growth.

Legal Contingencies

Legal matter pending before the Delhi High Court challenging PNGRB's Authorisation Regulations regarding the expiry of marketing and infrastructure exclusivity.

⚠️ Risk Analysis

Key Uncertainties

Regulatory changes regarding exclusivity could impact margins by 5-10% if third-party marketers utilize MGL's infrastructure. Gas allocation cuts remain a primary risk to contribution margins.

Geographic Concentration Risk

High concentration in the Mumbai Metropolitan Region, though the UEPL acquisition is intended to diversify this risk.

Third Party Dependencies

High dependency on GAIL for gas supply and GoI for APM gas price notifications.

Technology Obsolescence Risk

Low risk in the medium term as natural gas is a transition fuel; digital transformation is underway via ANPR and integrated billing to improve retail efficiency.