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Analyst Meet / AGM
14-Nov-17
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Conference Call
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Mahanagar Gas
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Expects volume growth to pick up in H2FY18
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Mahanagar Gas held a conference call to discuss the results for the quarter ended September 2017 and way forward. Managing Director- Mr. Rajeev Mathur and CFO Mr. Sunil Ranade along with other senior management of the company addressed the call
Highlights of the Concall
- As of 30 Sep 2017, the company is supplying to 570000 vehicles with 206 CNG stations and 9,75,000 PNG households.
- Volumes increased 4% on a YoY basis to 2.7 million cubic metres a day (mcmd) in 2QFY18 driven by muted 3% growth in CNG volumes and 6% growth in PNG volumes backed by 11% jump in residential PNG. The company expects volume growth to pick up in H2FY18 in line with the medium-term guidance of 5-6%.
- Volumes for CNG vehicles are expected to pick up for the rest of the year as the Maharashtra RTO as permitted the registration of 1000 new 3-wheelers and the same is expected to be on board in the next couple of months.
- Gross margin improved during the quarter due to better price realization due to increase in alternate industrial prices.
- CNG sales for Q2FY18 were 1.4 million kgs per day while for Q2FY17 it was 1.35 million kgs per day.
- The gas cost expense for FY 2017 was US $3.06 per mmbtu while for H1FY18 it is US $2.48 per mmbtu.
- While the current bidding mechanism for CGD distribution network includes big businesses for the bidding, the company has taken up the issue with PNGRB to consider the companies having expertise, experience and a roadmap to lay the CGD infrastructure to provide service to the consumers over time. The company is hopeful of the situation to improve in the next couple of years. The company believes that gas companies will have a higher weightage factor with respect to the same.
- Out of the 200 cities that the government plans to build CGD network in, the company believes about 70-75% of the companies to have a target of 1-2 mmscmd, while the rest of the cities can be expected to have a target of more than 0.5 mmscmd. The capex to set up a CGD infrastructure could range anywhere between Rs 15-500 crore depending upon the location, population, etc.
- For household consumers, the company keeps gas prices in sync with the prices of subsidized LPG cylinder, while for CNG the prices are already at a 25-30% discount to the other alternate fuels.
- The company expects capex for FY18 at Rs 250 crore, subject to the approvals and licenses obtained the MGL to build the CGD infrastructure.
- The company is targeting to set up 20 CNG stations in FY2018 out of which 4 were set up in Q1FY18, 9 in Q2FY18 while the rest will be completed by the end of the financial year. The company has also set up 3-4 stations in Karjat and 1 in Uran.
- Commission payable has increased marginally for the company own dealers due to the inflationary pressures. However OMCs commissions are still under negotiation.
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