Mahanagar Gas Limited Q3 FY25 Earnings Call Summary

Summary

Mahanagar Gas Limited (MGL) - Q3 FY 2025-26 Earnings Call Summary Monday, February 09, 2026, 4:00 PM IST

Event Participants

Executives 3 Ashu Shinghal (Managing Director), Rajesh Patel (Chief Financial Officer), Rajesh Wagle (Senior Vice President – Marketing)

Analysts 11 Aditya Welekar, Bineet Banka, Daksh Choudhary, Lokesh Manik, Mayank Maheswari, Nitin Tiwari, Probal Sen, Sabri Hazarika, Somaiah V, Vikas Jain, Yash Nandwani

Financials & KPIs

Geographic & Segment Commentary

• GA-1 (Mumbai): Volumes are relatively muted (growth <2%) due to land scarcity for new stations and the reduction of the BEST CNG fleet from 3,000 to a few hundred buses. Strategic focus is on large-format stations, including a mega-station in Wadala with 60 filling points.
• GA-2 & GA-3 (Raigarh & Environs): These areas contribute roughly 2.0 MMSCMD and 0.3 MMSCMD respectively. Growth is stronger here due to easier land availability; major capex is directed toward these regions to capture industrial and transport demand.
• Unison Enviro (UEPL): Significant expansion with the 100th CNG station commissioned in Latur; volumes grew to 0.283 MMSCMD from 0.194 MMSCMD YoY. MGL has added 47 stations in these areas over 23 months.

Company-Specific & Strategic Commentary

• Sourcing Optimization: MGL reduced Henry Hub (HH) offtake by 4% in Q3, replacing it with spot and HPHT gas. The company is shifting toward a mix of Brent-linked contracts to mitigate HH volatility.
• Battery Cell Project: The project is currently on a “few months hold” due to a significant drop in global cathode and battery prices. Management is reassessing the proposition and seeking strategic equity partners to mitigate risk.
• Infrastructure Expansion: Added 120.3 km of pipeline (total 8,182 km) and 6 CNG stations in Q3. The focus shift is from station count to “large format” stations on major highways and Port Trust land.
• Pricing Strategy: Implemented a ₹0.50/kg hike in CNG on February 1, 2026, to offset rising input costs and unified zonal tariff impacts.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Volume Drivers & Fleet Conversions

• Question: What initiatives are being taken to drive volumes in core areas? (Vivekanand S)
• Answer: MGL is targeting large fleet owners for conversions, including a recent deal for 300 trucks at JNPT. Upfront discounts via fuel cards are being used to improve payback economics for transporters (Rajesh Wagle).

Gas Sourcing Dynamics

• Question: How are you managing the volatility in Henry Hub prices? (Yash Nandwani)
• Answer: MGL utilizes the 60% take-or-pay flexibility in HH contracts. Management is drawing less during high-price months and has signed new Brent-linked contracts (12,500 MMBtu) to optimize the landed cost (Rajesh Patel).

Battery Project Viability

• Question: Is there an update on the timing of the battery manufacturing project? (Somaiah V)
• Answer: Global battery prices have crashed over the last 6 months. MGL is looking for strategic partners and the project is temporarily on hold to ensure long-term contractual viability (Ashu Shinghal).

Impact of Unified Tariffs

• Question: How does the new zonal tariff affect gas costs? (Yogesh Patil)
• Answer: Management is ensuring that at least 90% of gas falls under Zone 1. The weighted average transportation cost is expected to rise by only ₹0.10 to ₹0.20 per SCM (Rajesh Patel).

Key Takeaway

Mahanagar Gas Limited reported a steady Q3 FY26 with a 7.19% YoY increase in volumes to 4.62 MMSCMD and an EBITDA of ₹352 crores. While Mumbai (GA-1) faces growth constraints from land scarcity and the BEST fleet’s transition to electric vehicles, the company is successfully pivoting toward GA-2, GA-3, and the newly acquired UEPL territories, where it recently hit the 100-station milestone in Latur. Strategically, MGL is aggressively managing its sourcing mix, reducing reliance on volatile Henry Hub indices in favor of Brent-linked and HPHT gas, while maintaining a healthy EBITDA margin of ₹9.5/SCM for the 9-month period. Looking ahead, MGL guides for double-digit volume growth in the medium term and a normalized margin of ₹8.0-₹9.0/SCM, supported by a ₹1,200 crore annual capex plan and a tactical pause on its battery cell venture to seek strategic partnerships. Success remains contingent on navigating global gas price fluctuations and successfully commissioning large-format refueling infrastructure to alleviate urban congestion.