Mahanagar Gas makes a fantastic debut

Mahanagar Gas made a fantastic debut on the bourses today. It got listed on the BSE at Rs.540 as against the IPO price of Rs.421/share.

The company had made an offer for sale of up to 2.47 crore shares in the price band of Rs.380-421/share. This offer for sale was subscribed 64.54 times.

Mahanagar Gas, a city gas distribution company, is an equal joint venture between GAIL and British Gas (now owned by Royal Dutch Shell), each owning 45%, with balance 10% held by Maharashtra State Govt. Company supplies compressed natural gas (CNG) to 4.7 lakh vehicles, through 188 CNG filling stations and distributes piped natural gas (PNG) to 8.6 lakh households and 2,900 commercial establishments in Mumbai and its adjoining areas. It has recently been awarded distributorship for Raigad district in Maharashtra. For FY16, company sold 2.43 mmscmd gas, split 74:26 between CNG and PNG by volume, and 71: 29 by turnover.

Our recommendation in our New Issue Analysis section was, “Despite stagnant financial performance, company’s margins remain healthy vis-à-vis peers. Attractive pricing coupled with bright industry prospects make this issue a buy. One can apply at the upper band for both listing gains and with a medium term view.”