MGL — earnings call
The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.
Prepared remarks
Moderator · Conference Operator
MR. S.
RAMESH – NIRMAL BANG EQUITIES PRIVATE LIMITED Mahanagar Gas Limited May 09, 2023
Ladies and gentlemen, good day and welcome to the Mahanagar Gas Limited Q4 FY23 Conference Call hosted by Nirmal Bang Equities Private Limited.
As a reminder, all participants’ lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference call, please signal an operator by pressing “*” then “0” on your touch- tone phone.
Please note that this conference is being recorded.
I now hand the conference over to Mr. S.
Ramesh from Nirmal Bang Equities.
Thank you and over to you, sir.
S. Ramesh
Good evening and thank you very much.
On behalf of Nirmal Bang Institutional Equities, I have great pleasure in inviting you all to the Q4 FY23 Earnings Call with the Management of Mahanagar Gas Limited.
Their Company is represented by Mr. Ashu Shinghal – Managing Director, Mr. Rajesh Patel – Chief Financial Officer, and Mr. Rajesh Wagle – Senior Vice President, Marketing.
May I hand over the call to Runjhun from E&Y to give the disclaimer statement following which we will have opening remarks from the management and Q&A.
Runjhun, over to you.
Runjhun Jain
Welcome to the participants in this call.
Before we begin, I would like to mention that some of the statements made in today’s discussion may be forward-looking in nature and we believe that the expectation contained in the statements are reasonable.
However, these statements involve a number of risks and uncertainties that may lead to different results.
The risks and the uncertainties related to these statements are included but not limited to fluctuation of sales volume, fluctuation in foreign exchange or the cost and ability to manage growth.
I urge you to consider the quarterly numbers not a reflection of long- term trends or an indication of full year results.
They should not be attempted to be extrapolated or interpolated into a full-year number.
That said, I would now hand over the call to management.
Thank you and over to you, sir.
Moderator · Conference Operator
The next question is from the line of Abhilasha Satale from Quantum AMC.
Please go ahead.
Mahanagar Gas Limited May 09, 2023
Abhilasha Satale
My question is again related to volumes only.
During the quarter, we have seen some reduction in volumes.
How have the conversions moved during the quarter, and with the reduction in pricing, are we seeing any pickup in the conversions.
And of course, if you could give number of NCV conversion quantity.
Moderator · Conference Operator
The next question is from the line of Rajesh Aynor from ITI Limited.
Please go ahead.
Rajesh Aynor
Sir, my question is on total volume consumption on the CNG side.
Can you give us some idea about how much is consumed let’s say by the buses, by private cars when conversion happens, and by the three-wheeler autos?
Any ballpark number which is the major or larger segment for us?
Moderator · Conference Operator
The next question is from the line of Keval Shah from Banyan Tree Advisors Private Limited.
Please go ahead.
Keval Shah
Sir, my question is on the UEPL subsidiary.
Did we get the final approval on the acquisition?
Moderator · Conference Operator
The next question is from the line of Darshit from RoboCapital.in.
Please go ahead.
Darshit Vora
I just had two simple questions.
First of all, you said that we have a revenue target of say 5% to 6% growth, right?
Moderator · Conference Operator
The next question is from the line of Devansh Nigotia from SIMPL.
Please go ahead.
Devansh Nigotia
Sir, can you help us understand how much will be the percentage APM deficit in FY24 assuming 5% to 6% volume growth and the similar number for FY23?
Moderator · Conference Operator
The next question is from the line of Shubham Shukla from Voyager Capital.
Please go ahead.
Shubham Shukla
My first question is on EBITDA margin.
Even though we had a great quarter on this front – It is the highest in the last 5-6 quarters – but if I look at the past 9-10 years, we closed the year with lowest EBITDA margin ever.
Are we expecting those 30% to 35% levels plus EBITDA margins like we had 2 years back?
Moderator · Conference Operator
The next question is from the line of Varatharajan Sivasankaran from Antique Stockbroking Limited.
Please go ahead.
Mahanagar Gas Limited May 09, 2023
Varatharajan S.
Sir, you had earlier guided for some upgradation of outlets.
Has there been any upgradation done during the last quarter as well as the financial year?
I thought we were planning to add dispensing units that is part of your expansion program earlier which you had guided for.
Moderator · Conference Operator
The next question is from the line of Hemang Khanna from Nomura.
Please go ahead.
Hemang Khanna
Sir, just 3 quick questions from my side.
Sir, if you could help us understand on the operating cost side, what was exactly the reason cost has remained largely steady Y-o-Y and are materially down Q-o-Q?
Secondly, on the I&C realizations if you could help us with the realizations for Mahanagar Gas Limited May 09, 2023 this quarter?
And lastly, you had helped us with these numbers earlier but what had been the total gas sourcing for FY24?
What is the breakup across the various sources of gas?
Moderator · Conference Operator
The next question is from the line of Yogesh Patil from Daulat Capital.
Please go ahead, sir.
Yogesh Patil
Sir, can you please share what was the APM gas allocation for the quarter 4 and what is the current proportion of APM gas for the priority segment?
Sir, this question is important from the point of view of your gross margin improvements in this quarter.
If your CNG volume has declined sequentially and your input APM gas sourcing remain at the same level in the absolute number, then it suggests that the APM share in the priority basket is higher which led to the lower cost of gas and that has ultimately led to the gross margin improvement.
Is that a correct understanding on the APM side?
Moderator · Conference Operator
The next question is from the line of Sabri Hazarika from Emkay Global Financial Services Limited.
Please go ahead.
Sabri Hazarika
If we look into Q4, I think EBITDA per SCM was one of the highest, probably the highest barring one quarter when it went up to 14 and now you have mentioned that the gas costing mix is somewhat similar at least for the next 1 to 2 quarters and you have also passed on whatever benefit has accrued from lower APM gas prices.
From a 1 to 1.5 quarter perspective, is this Rs.
12 to Rs.
13 per SCM EBITDA sustainable now or do you think that you could be passing on further and bring the margins to a more normalized levels?
Moderator · Conference Operator
The next question is from the line of Nitin Sharma from MCPro Research.
Please go ahead.
Mahanagar Gas Limited May 09, 2023
Nitin Sharma
Last year, we started deploying CDUs.
Can you help us understand what happened throughout the year?
What kind of volume came from it?
How many have been deployed and what are your plans for FY24?
Moderator · Conference Operator
The next question is from the line of Kirtan Mehta from BOB Capital Markets.
Please go ahead.
Kirtan Mehta
One question on the growth rate that we have seen in GA1 and GA2.
Would you be able to give a breakup of the volume growth that we have seen in these two GA’s?
Moderator · Conference Operator
The next question is from the line of S.
Ramesh.
Please go ahead, sir.
S. Ramesh
Before we close the session, I would like to have your thoughts in terms of what is the contribution from new OEM vehicles in your conversions for 4th quarter?
And do you see any increase in the number of new OEM CNG vehicles?
Because Maruti is talking about very ambitious growth plans for CNG vehicles.
What is your view on that?
Moderator · Conference Operator
On behalf of Nirmal Bang Equities, that concludes this conference.
Thank you for joining us and you may disconnect your lines.
(This document has been edited for improving readability)
Registered Address
MGL House, G-33 Block, Bandra-Kurla Complex, Bandra (East), Mumbai – 400051, Maharashtra
Contact details
[identifier removed]
Website
www.mahanagargas.com
CIN
L40200MH1995PLC088133
Questions and answers
Coming to the quarter-on-quarter comparison
Average sales volume of Q4 FY23 is 3.372 MMSCMD as compared to previous quarter of 3.412 MMSCMD.
The average sales volume of 3.372 consists of CNG volume of 2.41, domestic PNG volume of 0.51, and I&C volume of 0.452 MMSCMD.
Compared to the previous quarter, overall volume has reduced due to 2.6% reduction in CNG volume.
This is primarily due to high CNG prices of Rs.
89.5 which has been now reduced to Rs.
87 and further reduced to Rs.
79 with effect from 8th of April.
Thus, we expect that with reduction in these CNG prices, new growth volume should pick up.
EBITDA for the financial year 2022-23 is Rs.
1,184 crores compared to previous financial year EBITDA of Rs.
924 crores.
That is an increase of 28%.
Net PAT (profit after tax) is Rs.
790 crores compared to PAT of Rs.
597 crores in previous financial year.
That is an increase of 32%.
Q4 EBITDA has substantially improved to Rs.
390 crores as compared to Rs.
256 crores in the previous quarter.
Mainly, this is a result due to reduction in weighted average cost of gas during this quarter.
Net PAT for the quarter is increased to Rs.
269 crores from previous quarter of Rs.
172 crores, an increase of 56%.
I am happy to announce that the Board of Directors has also approved the final dividend of Rs.
16 per equity share for financial year 2022-23.
Thus, total dividend for the year including interim dividend already paid is Rs.
26 per share.
That is 260% on the face value of Rs.
10 per equity share.
With this, I conclude and would now like to open the floor for questions.
Thank you very much for your patient listening.
Moderator · Conference Operator
We will now begin the question & answer session.
Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of Probal Sen from ICICI Securities.
Please go ahead.
Probal Sen
You spoke about the HPHT gas replacing costlier LNG.
If we can kindly get some details in terms of the overall volumes that we have, what is the extent of HPHT gas that we have in our portfolio, and how much was the LNG consumption for this quarter and for this year?