Maharashtra Natural Gas listing(MGNL IPO) could help the share value for IGL, Citi
Shares of Indraprastha Gas Ltd (IGL) rose during the morning session on January 7, following the approval from the board of directors of Bharat Petroleum Corporation Ltd (BPCL) for the listing of Maharashtra Natural Gas (MNGL IPO). International brokerage Citi Research expressed its support for the listing plans, reaffirming its positive outlook on IGL shares.
MNGL, a joint venture between BPCL, GAIL (India), and IGL, is gearing up for an Initial Public Offering (IPO) worth over Rs 1,000 crore. BPCL’s board has given preliminary approval for the issue, as stated in a company filing by the oil marketing company on January 6.
BPCL and GAIL hold a 22.5 percent stake in MNGL, while IGL holds a 50 percent stake, and the Maharashtra Industrial Development Corporation (MIDC) has a 5 percent stake in the joint venture.
By 9:20 am, IGL shares were trading at Rs 428.95, up by 1.2 percent, while BPCL and GAIL (India) were also up by 1.3 percent at Rs 288.6 and Rs 187, respectively. Citi Research reiterated its positive stance on IGL shares, setting a price target of Rs 450 per share, representing a potential six percent increase from the previous closing price.
The listing of MNGL could unlock value for the company, according to the brokerage. Citi Research mentioned that MNGL and Central U.P. Gas Limited (CUGL), IGL’s two joint ventures, could contribute Rs 56 per share to IGL’s target price of Rs 450 each, with MNGL contributing Rs 45 per share.
Furthermore, Citi Research suggested that the listing could also unlock value in GAIL’s investments in unlisted city gas distribution players, potentially adding Rs 12 per share to GAIL’s share price and setting a target of Rs. 280 apiece.
Earlier, the domestic brokerage Emkay Global had observed that the potential listing of Maharashtra Natural Gas could lead to increased value. However, there is a need for more clarity on MNGL’s earnings outlook following the APM cut.
Indraprastha Gas, which was established through a collaboration between GAIL and BPCL, was created to develop a city gas distribution network in the National Capital Region. Over the past two decades, it has grown to become one of the largest CGD companies in India. In addition to its operations, including its 50 percent stakes in subsidiaries Maharashtra Natural Gas (MNGL) and Central UP Gas (CUGL), it currently operates in 19 geographic areas.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.