CD Equisearch has issued a buy rating on Mahanagar Gas (MGL) with a target price of ₹1352 in its research report dated June 04, 2026. According to the brokerage's analysis, the recommendation is based on 15x FY27 earnings over a period of 9-12 months. The bullish outlook comes despite operational challenges in the company's recent quarterly performance.
MGL demonstrated strong volume growth in Q4FY26, posting overall volumes of 420.5 million scm compared to 377.44 million scm in Q4FY25, representing an 11.4% year-on-year growth. As reported by CD Equisearch, CNG volumes increased by 14.1% (y-o-y) while PNG volumes grew by 5.1% (y-o-y). The company's overall revenue (net of excise duty) reached ₹2,051.22 crores in Q4FY26 versus ₹1,962.52 crores in Q4FY25, showing a 4.5% growth.
The CNG business segment showed robust performance with revenue growth of 13.2% (y-o-y) to ₹1,479.23 crores in Q4FY26, while total PNG revenue stood at ₹558.07 crores compared to ₹546.93 crores in Q4FY25. According to CD Equisearch's analysis, CNG business revenue growth of 13.2% significantly outpaced the overall company growth rate, indicating strong performance in this segment.
Despite revenue growth, MGL reported an operating profit of ₹260.34 crores in Q4FY26 against ₹394.97 crores in Q4FY25, representing a 34.1% decline. As noted by CD Equisearch, operating profit margin fell to 12.7% in Q4FY26 from 20.1% in Q4FY25, primarily due to readjustment in sourcing mix that offset any impact of volatile Henry Hub prices or zonal unified tariffs. The company's EBITDA/SCM (core) stood at ₹6.2 in Q4FY26.
According to CD Equisearch's report, MGL sees higher natural gas prices in the coming quarters, which could impact future performance. The brokerage notes that friction in passing on increased CNG prices would fail to catalyze margins, but emphasizes that the current valuation barely reveals its competitive edge in gas distribution. Despite operational challenges, the analysts maintain their positive stance on the stock based on the company's market position and growth prospects.
