2017 AR
http://www.bseindia.com/bseplus/AnnualReport/539957/5399570317.pdf
What will be the impact of Electrical vehicles on CGD co / on Mahanagar gas.?
76% revenue come from CNG business . And out of tht major portion come from Public transport like BEST, TMC etc…
As govt policy, 1st all public transport will convert into Electrical…
The broad theme is the shift to a gas based economy from a coal based one. There is a severe shortage of natural gas in India and one has to rely on imports. Therefore 110% of the domestically produced gas is diverted to CNG ( Transport ) and PNG ( domestic ), benefiting City Gas distributors and this is expected to continue.
Shift to electric is a reality and will happen at some point in the future. This will be very good news for City Gas Distributors as it will free up gas supplies that can be diverted to more productive uses like the industry and commercial enterprises which are anyways in desperate need for gas which is not available and hence have to rely on more expensive fuel. Also the price realizations are higher for these sectors compared to the priority sectors of Transport and Cooking gas which will be an added benefit.
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Members…
Indraprast gas, yes its a fair peer along with Guj Gas. performance wise, MGP is better in ROE, PAT margins than IPG. Still why the market is making MGL trade at a PE of 28, when Indraprast is trading at PE of 47.
what precisely the market is discounting for ?
IGL has a better volumes and a larger network + investments - it holds 50% stake in MNGL and CUGL. MGL has a network of 4838 kms of pipeline and 203 CNG stations while IGL has a network of 10718 kms of pipeline and 421 stations. Basically IGL is twice as big as MGL + marketable assets in associates. I am not sure IGL has a PE of 47 - its much lower at 35-37.
A better way to look at valuations is to compare the EV/km of pipeline. Roughly MGL is 2.5 cr per km & IGL is 2cr per km. It takes about 5cr per km of pipeline ( including land cost). So in my view , both companies are available below replacement value. However i am not sure about the pipeline laying cost as estimates vary.
Best
Bheeshma
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Nice analysis. Also, I would say that the valuation differential is primarily due to Delhi government’s stringent rules on pollution levels due to which CNG vehicles are actively used in Delhi whereas it is not still so in Mumbai. Basically, current volumes are high and growth visibility is also high for IGL.
Having said that, its better to be an investor in MGL as Mumbai will have to get stringent on pollution at some point in time in the future which can be positive for MGL.
Suggestions are welcome.
Q2 result out
http://www.bseindia.com/xml-data/corpfiling/AttachLive/2babd32b-8f04-476b-82b7-90af712d8669.pdf
Good set of numbers again from MGL driven by volume growth - particularly in the domestic PNG segment. The gap between CNG and Domestic PNG as a % of revenue is steadily narrowing. Of particular note is the increase in Investments + Cash & Equivalents. They have increased from 602.78 cr to 765.31 cr - a growth of 27% in 6 months.
Volume growth is just 2-3% right. Net profit have increased because of decrease in cost of natural gas.
Ya. Volume growth is expected to remain at this level unless there is a strong trigger in terms of new ola,uber conversion and so on. Having said that, the selling price can be increased if the petrol/diesel start rising due to the rise in the crude.
In a nut shell, only expansion can give volume growth in the near future. All in all, a good set of numbers.
At a quarterly level volumes are the highest they have been in the past 6 qtrs.
Q1-17 - 2.50 mmscmd
Q2-17 - 2.60 mmscmd
Q3-17 - 2.56 mmscmd
Q4-17 - 2.62 mmscmd
Q1-18 - 2.57 mmscmd
Q2-18 - 2.70 mmscmd
Another important development in the NG industry is that US has recently become a net exporter of NG having a global impact on Natural Gas prices and has played a key role in pushing prices down further. This is expected to continue.
As I see, adding new customers or connections only will increase the top line. How is this number growing.?
Also any commentary from management on estimates for new connections over next 12 months? How much more scope for expansion in Mumbai?
Selling price increase due to increase petrol/diesel price, will it result in any bottom line improvement?
Please participate in the concall scheduled for tomorrow regarding the details on the number of customers added etc.
http://www.bseindia.com/xml-data/corpfiling/AttachHis/908dcd9b-4e92-4f8f-bddd-c81a09629b43.pdf
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Volume growth should pickup and to be in the range of 6 percent approx for H2. Things looking up and expect upsurge in GA3 .
Looking at opening 3-4 stations in Karjat; 1 in uran ; 2 Mumbai- Pune expressway .
Total 9 new stations in Q3 and and approx 6 in Q4 .
Major capex going to be in Navi Mumbai, Thane , Kalyan & Ambernath.
Volume growth in Kalyan and Dombivali is 15-20 % but small if you take overall aggregate .
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I think MGL could become a cash generation machine - something like a See’s candies. By management’s own admission, they are underpricing to acquire customers. They will have significant room to increase prices a few years down the line once they have met their growth targets. The only issue is there isnt a Warren Buffet to force their price increases. And as a GAIL promoted company, government may prevent them from utilizing their pricing power entirely
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