Capitaline

Analyst Meet / AGM 19-Aug-19

Conference Call

Mahanagar Gas

Expects capex of Rs 400 crore per year over FY20-FY22

Mahanagar Gas held a conference call to discuss the results for the quarter ended June 2019 and way forward. Managing Director- Mr. Sanjib Datta, Deputy Managing Director- Deepak Sawant and CFO Mr. Sunil Ranade along with Senior Vice President Commercial -Mr.Rajesh Wagle, of the company addressed the call.
Highlights of the Concall

Overall volumes rose 3.3% YoY to 270 mmscm. Disappointment on volumes was led by 2% growth in CNG volumes of 197 mmscm while Industrial/Commercial PNG volumes rose 2.8% to 36.4 mmscm and Domestic PNG volumes 11.5% to of 36.7 mmscm

CNG sales fell by 0.3% QoQ mainly due to less offtake led by holiday season and 12% decline in CNG sales to state transport undertakings, which contribute to 8% to total CNG sales volume. Industrial sales volume fell by 3.4% QoQ on account of shutdown of some industries in April & May due to water supply constraints in Mumbai region.

The company believes the current macro has proven favourable for CNG where volumes continued to grow despite the downturn in auto sales, as CNG vehicle sales have bucked the trend and improved YoY for most large OEMs.

The company has 240 CNG stations (including 170 in collaboration with OMCs), and plans to add 46 new CNG stations in FY20.

The company plans to set up 3-4 LCNG stations. In the initial stages, these would only supply CNG and then gradually supply LNG once such vehicles become available.

The company added 42 new industrial and commercial customers during the quarter which led to total tally of 3700 (Restaurant/small commercials: 3500; large industries: 80; and SMEs: ~100)

Average realizations for commercial/industrial PNG volumes were at Rs 38/scm and Rs 33/scm respectively, forming 8% and 6% of total volumes.

Margin improvement in PNG segment was mainly driven by the industrial and commercial segments as these entirely consume spot LNG (prices of which have crashed to less than US$ 4/mmbtu). It expects spot LNG prices to remain soft over the next two quarters.

The company expects capex of Rs 400 crore per year over FY20-FY22.

About Rs 50 crore capex has been incurred in Raigad. The company plans to spend an additional Rs 75-100 crore here in FY20. The overall volume potential of Raigad is 0.6-0.7mmscmd (currently averaging ~0.03mmscmd).

The company does not believe the industry is saturated as penetration in the commercial segment in only 30%, and industrial volumes still look buoyant from geographic areas GA2 & GA3.

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