Mahanagar Gas tumbles on brokerage downgrade

Mahanagar Gas tanked 14.80% to Rs 1333.25 after a foreign broker downgraded the stock to

The brokerage also lowered the price target on the stock from Rs 1,480 to Rs 1,405, expressing concerns about regulatory risks to MGL's margins and initiating a negative catalyst watch on the stock. The downgrade was motivated by India's oil minister Hardeep Singh Puri's recent statements indicating a potential for drastic measures to ensure consumer benefits in the gas industry, despite opposition from the industry. The broker is particularly worried about this leading to renewed concerns about exclusivity and margins, with MGL's margin being seen as more susceptible due to the premium it enjoys.

Additionally, MGL on Tuesday evening, cut prices of Compressed Natural Gas (CNG) by Rs 2.5 per kilogram in and around Mumbai, citing a reduction in natural gas prices. The revised MRP of CNG, effective Wednesday, will be Rs 73.5 per kilogram.

Mahanagar Gas is in the business of City Gas Distribution ("CGD"), presently distribution of natural gas for domestic industrial, commercial customers and CNG vehicles.

The company reported 84.33% jump in consolidated net profit to Rs 317.18 crore on a 6.1% fall in revenue from operations to Rs 1,568.76 crore in Q3 FY24 over Q3 FY23.

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