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Featured IPOs – Mahanagar Gas Limited

Mahanagar Gas Limited is one of the largest city gas distribution companies in India. The company has more than 20 years of expereince in supplying natural gas in Mumbai and are presently the sole authorized distributor of Compressed Natural Gas(CNG) and Piped Natural Gas(PNG) in Mumbai, its adjoining areas and the Raigad district in Maharashtra. 

 

The company is promoted by GAIL and BGAPH each of who holds 49.75% of its Equity shares. GAIL Limited is the largest state-owned natural gas processing and distribution company in India. BG Asia Pacific Holdings Pte (BGAPH) is a part of the Shell Group and is headquartered in Singapore, is an international exploration and production and LNG group of companies.

Mahanagar Gas Limited has already connected more than 7 lakh households and nearly 2300 small commercial and industrial establishments. Mahanagar Gas Limited also supplies Compressed Natural Gas(CNG) to more than 3.7 lakh vehicles which include above 1.7 lakh rickshaws and over 57,000 taxis & about 1.3 lakh cars in Mumbai, Thane, Mira-Bhayander, Navi Mumbai and beyond. 

Besides, about 3400 BEST/TMT/MSRTC/NMMT buses, above 5000 LCVs/Tempos/Trucks/Private buses are plying on CNG supplied through its wide distribution network of about 390 km of steel and over 3850 km of MDPE pipeline system and over 170 CNG filling stations having more than 920 dispensing points.

Issue Detail of Mahanagar Gas Limited
  • Issue Opens: Jun 21, 2016
  • Issue Closes: Jun 23, 2016
  • Issue Size: 24,694,500 Equity Shares of Rs 10 aggregating up to Rs 1,039.64 Cr
  • Face Value: Rs 10 Per Equity Share
  • Issue Price: Rs. 380 – Rs. 421 Per Equity Share
  • Market Lot: 35 Shares
  • Minimum Order Quantity: 35 Shares
  • Minimun Investment Amount:Rs.14735 on Upper Band
  • Listing At: BSE, NSE

Objective of Public Issue
The company believes that the listing of the Equity shares will enhance its brand name and provide liquidity to the existing shareholders. Listing will also provide a public market for the Equity shares in India. The Company will not receive any proceeds from the offer and aal the proceeds shall go to the Selling Shareholders

Promoter’s Stake
Pre-issue promoter group stake in MGL stands at 90 per cent, while public stake(Maharastra Government) is 10 per cent. Post IPO, promoter group stake will decline to 65 per cent.

Financial Health of Mahanagar Gas Limited
Mahanagar Gas Limited’s net profit rose 2.55% to Rs 308.68 crore on 0.76% fall in revenue from operations to Rs 2078.92 crore in the year ended 31 March 2016 over the year ended 31 March 2015.

Mahanagar Gas Limited has consistently generated over 21 per cent RoE and FY11-16 CAGR for revenue, EBITDA and PAT has been 14 per cent, 6 per cent and 6.5 per cent.

It has healthy cash and equivalent balance of Rs 560 crore (in FY16) and average dividend payout of 50 per cent and 40 per cent in the last 5 and 10 years, respectively.

Valuations Compared to Peers
At the upper band of the offer price of Rs 421, Mahanagar Gas Limited is valued at 14x of FY2016 earnings and 12x of FY2016 earnings. On EV/EBITDA basis, it is valued at 6.5x. 

The offer price is substantially lower than the current valuation multiples of its listed peers (Indraprastha Gas & Gujarat Gas). Indraprastha Gas is trading at 19x its FY2016 earnings and 10x EV/EBITDA, while Gujarat Gas is trading at 12x EV/EBITDA based on FY2016 earnings.

Verdit
Go For it for a quick gain of 10-15%!!!


Listing Gain/Loss
Watch this space

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