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Tuesday, May 28, 2024

Mahanagar Gas Stock Drops 16% Following Citi’s Citation of Regulatory Risks to Margin

<p>Mahanagar Gas shares dropped as much as 16 percent on Wednesday after a downgrade from its previous recommendation of “buy” to “sell” by brokerage company Citi. Moreover, it lowered its price estimate for the stock from Rs 1,480 to Rs 1,405.</p>
<p><img decoding=”async” class=”alignnone wp-image-479590″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-mahanagar-gas-stock-drops-16-following-citis-citation-of-regulatory-risks-to-margi.jpg” alt=”theindiaprint.com mahanagar gas stock drops 16 following citis citation of regulatory risks to margi” width=”963″ height=”722″ title=”Mahanagar Gas Stock Drops 16% Following Citi's Citation of Regulatory Risks to Margin 6″></p>
<p>Citi has initiated a negative catalyst watch on the stock and highlighted the regulatory risk to MGL’s profitability.</p>
<p>The brokerage expressed alarm about recent remarks made by India’s energy minister, Hardeep Singh Puri, in which he claimed that although the government’s gas reforms have not entirely benefited end users, City Gas Distribution corporations have continued to make larger profits.</p>
<p>The minister said that, despite industry resistance, the government could be prepared to take extreme measures to guarantee that consumers gain.</p>
<p>Citi worries that this may lead to further worries about exclusivity and margins, with MGL’s margin being particularly vulnerable given the premium it receives.</p>
<p>The price of Mahanagar Gas shares, based on Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) of Rs 11.5 per standard cubic meter (scm), is 13 times the financial year 2026 price-to-earnings forecasts.</p>
<p>IGL was down 6% from the previous closing at Rs 429.90 on the National Stock Exchange (NSE) at 12:23 am. In contrast to the average trading volume of 18 lakh equity shares over the course of a week and a month, as much as 55 lakh IGL shares had exchanged hands on the BSE and NSE combined.</p>
<p>IGL’s stock has dropped more than 4% in the last year, lagging the benchmark Nifty 50, which has increased by 26% at the same time.</p>

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