(Reuters) – Indian city-gas distributor Mahanagar Gas reported a 16.5% decline in second-quarter profit on Thursday, hurt by a surge in fuel costs.
The state-backed natural gas distributor’s profit after tax fell to 2.83 billion rupees (about $34 million) in the quarter ended Sept. 30 from 3.39 billion rupees a year earlier, the company said in an exchange filing.
Its revenue from operations rose 8.6% to 18.77 billion rupees, while total expenses rose 18% to 15.55 billion rupees, owing to a 20% increase in natural gas costs.
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KEY CONTEXT
Indian city gas distribution firms’ earnings have been under pressure as they are forced to procure gas on the more expensive open market.
Allocation of natural gas sold under government-set administered pricing mechanism has fallen due to lower domestic output.
Jefferies had expected allocation of gas under administered pricing mechanism for city gas distribution firms like Mahanagar Gas, Indraprastha Gas and Gujarat Gas to decline to 65% in the quarter, leading to higher dependence on imported liquefied natural gas.
PEER COMPARISON
Valuation (next Estimates (next 12 Analysts’ sentiment
12 months) months)
RIC PE EV/EBIT Revenue Profit Mean No of Stock to Div
DA growth growth rating* analysts price yield
target** (%)
Mahanagar 12.91 8.31 6.72 -1.77 Buy 13 0.87 1.96
Gas
Indraprasth 15.81 10.25 4.67 5.37 Hold 11 0.82 2.08
a Gas
Gujarat Gas 24.79 14.99 7.85 21.17 Hold 12 0.94 1.06
Gail 12.81 9.60 4.71 10.46 Hold 25 0.89 2.59
(India)
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG IBES
— $1 = 84.0440 Indian rupees
(Reporting by Ashish Chandra in Bengaluru, Additional Reporting by Manvi Pant; Editing by Abinaya Vijayaraghavan and Mrigank Dhaniwala)
