Shares of Mahanagar Gas fell as much as 16 per cent on Wednesday after brokerage firm Citi downgraded the stock to “sell” from its earlier rating of “buy.” It also cut its price target on the stock to Rs 1,405 from Rs 1,480 earlier.
Citi has cited regulatory risk to MGL’s margins and has also opened a negative catalyst watch on the stock.
The brokerage said that it is concerned by the recent statements made by India’s oil minister Hardeep Singh Puri, where he said that end consumers have failed to fully benefit from the government’s gas reforms and that City Gas Distribution companies are continuing to enjoy higher profits.
The minister also said that the government may be willing to consider drastic steps to ensure that the consumers benefit, notwithstanding opposition from the industry.
Citi fears that this could translate into renewed concerns on exclusivity and margins, with MGL’s margin being more susceptible, given the premium it enjoys.
Mahanagar Gas shares are trading at 13 times the financial year 2026 price-to-earnings estimates based on Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of Rs 11.5 per standard cubic meter (scm).
At 12:23 am, IGL was trading at Rs 429.90 on the National Stock Exchange (NSE), down 6 per cent from the previous close. As many as 55 lakh IGL shares had changed hands on BSE and NSE combined, compared to a one-week and one-month average trading volume of 18 lakh equity shares.
In the past year, IGL stock has fallen over 4 per cent, underperforming benchmark Nifty 50 which has gained 26 per cent during the period.
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