Mahanagar Gas stock tumbles 16% to hit 6-week low after Citi cuts target price
Mahanagar Gas, the leading city gas distributor in Mumbai and surrounding areas, tumbled 16.2% to ₹1,305 apiece in today's intraday trade, reaching a 6-week low. This sharp decline was triggered by a rating downgrade from 'Buy' to 'Sell' by the global brokerage firm Citi. The brokerage also lowered the target price from ₹1,480 to ₹1,405 apiece, citing concerns about the drop in margins.
This adjustment followed remarks made by Oil Minister Hardeep Singh Puri during an industry meeting. Puri noted that the government's efforts towards natural gas reforms haven't effectively reached end customers, as indicated by the robust financial performance of city gas distributors. Also Read IIFL Finance share price down 20%; Jefferies downgrades the stock to Hold The government will consider measures to ensure that the full benefits of the gas reforms are passed on to the end-consumers, said the Minister.
In recent years, India has made significant strides towards promoting green mobility, with the government actively managing CNG prices as part of this initiative. However, if further measures are implemented to keep CNG prices low, it could potentially impact the margins of Mahanagar Gas. On the other hand, the company on Tuesday cut the price of compressed natural gas.
The company said the prices are being reduced from midnight on March 5 due to a dip in gas input costs. The CNG price now offers savings of 53% compared to petrol and 22% compared to diesel at current price levels in the financial capital, according to the company. Also Read: Multibagger stock: Electrosteel Castings zoomed over 380% in a year; is there more upside left? The reduction in CNG price would help to increase the consumption of natural gas in the
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