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The price target assigned by Morgan Stanley implies a potential upside of over 30% from Monday’s closing levels.
In its note, the foreign brokerage said that Mumbai is an ever-expanding city with rising travel and energy needs.
Natural gas is considered the fuel of the future for Mumbai, and MGL is facilitating its adoption while aggressively capturing market share to service a 125-billion-mile market.
Morgan Stanley described this as both MGL’s and Mumbai’s “Tesla-like moment” for gas adoption.
The brokerage expects the global gas market to remain balanced in 2025 and oversupplied by 2027.
Approximately one-fifth of MGL’s gas sourcing is linked to LNG. While this may result in lower margins (with returns close to the regulated utility ROCE of 15%), structural volume growth will be the key driver for re-rating, it added.
Emkay Global had also upgraded MGL shares to ‘Buy’ from ‘Add,’ with a price target of ₹1,70.
The brokerage firm expects a weak third quarter for MGL, but said that the fourth quarter of FY25 could see improvement, driven by the partial reinstatement of the APM allocation cut and potential price hikes. CGD companies could return to normative margin levels in FY26, supported by favorable LNG sourcing.
Out of the 33 analysts that have coverage on Mahanagar Gas, 15 of them have a ‘Buy’ recommendation on the stock, while the other six have a ‘Hold’ rating. The remaining 12 has a ‘Sell’ rating on the counter.
MGL shares settled 4.37% lower on Monday at ₹1,229.90. The stock has corrected 38% from its recent peak of ₹1,988.
