MGL and IGL shares zoom over 5% as UBS hikes target price, sees 32% upside – Market News

Shares of Indraprastha Gas Ltd. (IGL) and Mahanagar Gas Ltd. (MGL) soared over 5% on Tuesday, reaching record levels after global brokerage firm UBS upgraded IGL to a ‘Buy’ from its previous ‘Sell’ rating and raised the price target to Rs 700 from Rs 400 per share.

IGL’s stock gained as much as 5%, hitting an intra-day high of Rs 559.70, while MGL shares surged 6% to a record high of Rs 1,922 on the NSE. The revised price target for IGL implies a potential upside of nearly 32% from Monday’s closing levels.

UBS Upgrades IGL Outlook

UBS highlighted a shift in their outlook on IGL, citing strong near-term fundamentals and promising inorganic growth prospects. The brokerage had previously been bearish on IGL due to slower volume growth in recent quarters and concerns over the potential risks posed by electrification.

What’s the new target for MGL?

In addition to IGL, UBS has maintained its ‘Buy’ rating on MGL, increasing the target price to Rs 2,400 from Rs 1,600 per share. The brokerage emphasized that both organic and inorganic volume growth for MGL could continue to surpass expectations.

Improved Volume Growth Projections

However, UBS now expects IGL’s volume growth to improve, forecasting a rise from 4% year-on-year in FY24 to an 8.2% compound annual growth rate (CAGR) between FY24 and FY27.

UBS pointed to IGL’s expansion into new geographies and infrastructure development as key growth drivers, with potential mergers and acquisitions (M&A) opportunities yet to be reflected in the stock price.

Volume and EBITDA Growth Forecasts for MGL 

UBS raised its volume growth estimates for MGL by 7-11% for FY25-27, driven by infrastructure expansion and the growth of the CNG fleet.

The brokerage house also lifted its EBITDA per standard cubic meter (scm) forecast for FY25-27 by 6-11% to Rs 12.1-12.3/scm, factoring in MGL’s pricing strategies. Similar to IGL, potential M&A opportunities have not yet been factored into MGL’s current stock price.

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