According to The Hindu BusinessLine, broker Modern Intelligence has issued a buy rating on Mahanagar Gas with a target price of ₹1,352. The current market price stands at ₹1,074, indicating a potential upside of approximately ₹278 based on the broker's recommendation.
As reported by The Hindu BusinessLine, Mahanagar Gas has significantly expanded its infrastructure to capitalize on growing CNG demand. The company added 861 km to its aggregate steel and PE pipeline network (bringing total to about 8,320 km) and 52 CNG stations (increasing total to 518 stations) in FY26. After investing over ₹1,060 crore in capital assets during FY26, the company has outlined plans to invest another ₹1,000 crore for FY27.
According to the report, India's city gas distribution sector is positioned for strong growth with projections of 13% CAGR during 2026-31. The government's efforts to promote PNG adoption over LPG are expected to help Mahanagar Gas accelerate new infrastructure rollout and capture additional demand for piped gas, supporting the company's expansion strategy.
As reported by The Hindu BusinessLine, Mahanagar Gas faced margin pressure due to rising CNG prices this fiscal year, which resulted in better realisation but also impacted profitability. Operating profit margin fell from 21.6% in FY25 to 17.6% in FY26, with operating profits declining to ₹1,451.1 crore in FY26. The broker expects margins to further compress to about 16% in FY27 due to volatile natural gas costs from the US-Iran war situation.
According to the broker's analysis reported by The Hindu BusinessLine, the target price of ₹1,352 is based on 15x FY27 earnings over a 9-12 month investment horizon. The recommendation is supported by the company's strategic positioning to benefit from India's growing CNG sector and government initiatives to reduce LPG reliance through PNG adoption, despite near-term margin pressures from volatile natural gas pricing.
