Mahanagar Gas (MAHGL IN) – Q2FY26 Result Update – Strong vol growth continues – BUY
Published on 30 Oct 2025
Due to the merger of Unison Enviro Private Limited (UEPL), our estimates are not comparable. MAHGL continued its momentum of strong volume growth at 9.9% in H1FY26 and 3.1% QoQ driven by the merger of UEPL. However, Adj EBITDA/scm declined 16.4% sequentially to Rs8.0 (Q1FY26: Rs9.6) due to higher input costs/scm which increased by 4.3% QoQ and 26.4% QoQ increase in employee expenses/scm, partly offset by -2.5% QoQ decline in other expenses/scm. This led to a sequential decline of 12.9%/6.4% in Adj. EBITDA/Adj. PAT, which stood at Rs3.4bn/Rs1.9bn in Q2FY26. We continue to believe that the volume growth momentum will likely sustain driven by newly added locations post UEPL merger & GA3, continued momentum in CNG adoption by goods carriers and increased industrial volume sales. We expect volume growth of 10.1%/11.2% and Adj EBITDA/scm of Rs9.5/10.0 in FY27/FY28 respectively. We revise our target price upwards to Rs1,531 from Rs1,471, raising the valuation multiple from 12x to 13x FY27/28 EPS while maintaining a “Buy” rating driven by continued momentum in expected volume growth.
