Mahanagar Gas zooms 12% on stake sale by British Gas

Topics Buzzing stocks | Shell

Shares of Mahanagar Gas (MGL) rallied 12 per cent to Rs 828 on the National Stock Exchange (NSE) in early morning deal on Tuesday, after BG Asia Pacific Holdings (BGAPH), a wholly-owned subsidiary of Shell, sold 10 per cent stake in the company via block deals.

Around 9.98 million equity shares representing 10 per cent total equity of MGL changed hands for total consideration of Rs 770 crore on the NSE, the exchange data shows. BG Asia Pacific Holdings sold shares at an average price of Rs 780 per share.

The names of the buyers were not ascertained immediately.

At 10:11 am, the stock was trading 8 per cent higher at Rs 850 apiece on the NSE. In comparison, the benchmark Nifty 50 was ruling flat at 11,002 levels, down 0.46 per cent. A total of 5.81 million shares of MGL changed hands on the NSE and BSE till the time of writing this report. 

The stock has underperformed the market by falling 25 per cent from its recent high of Rs 1,055 on March 29, as compared to a three per cent decline in the benchmark index till Monday.

Earlier in April, Shell had reduced its shareholding in Mahanagar Gas from 32.5 per cent to 24 per cent. “This is part of Shell’s ongoing portfolio optimisation to transform Shell into a simpler company, delivering stronger returns,” Shell had said in its media statement. CLICK TO READ FULL ARTICLE

There was an indirect change in holding of one promoter of the company, when in February 2016, Royal Dutch Shell acquired BG (British Gas) worldwide.

Analysts say the development is positive for the company and recommend investors buy the stock from a long-term perspective.

"We think this could be a good opportunity to accumulate the stock given attractive valuations at 12x FY20E P/E in the context of nearly 6 per cent free cash flow (FCF) yield and nearly 10 per cent FY19-22E earnings CAGR (compound annual growth rate), driven by margin expansion (from Rs 8.2/scm in FY19 to Rs 9/scm in FY20-22E) and nearly 6 per cent volume CAGR. Maintain Buy," said foreign brokerage firm Jefferies in its recent report.

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