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. NITIN TIWARI – PHILLIPCAPITAL (INDIA)
PRIVATE LIMITED · Management
Mahanagar Gas Limited October 30, 2023
Moderator · Conference Operator
Ladies and gentlemen good day and welcome to Mahanagar Gas Limited Q2 FY24 Earnings Conference Call hosted by PhillipCapital (India) Private Limited.
As a reminder all participant 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 touchtone phone.
Please note that this conference is being recorded.
I now hand the conference over to Mr. Nitin Tiwari from PhillipCapital (India) Private Limited.
Thank you and over to you sir.
Nitin Tiwari
Thanks Rico.
Good evening ladies and gentlemen.
On behalf of PhillipCapital (India) Limited, I welcome everyone to Mahanagar Gas Limited’s 2nd Quarter Earnings Call.
We have the pleasure of having with us the senior management team of Mahanagar Gas Limited, represented by Mr. Ashu Shinghal – Managing Director, Mr. Sanjay Shende – Deputy Managing Director, Mr. Rajesh Patel – Chief Financial Officer and Mr. Rajesh Wagle – Senior Vice President (Marketing).
I shall now hand over the floor to the Management for their remarks which shall be followed by the Q&A session.
Over to you Runjhun.
Runjhun Jain
Thank you Nitin.
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 expectations contained in the statements are reasonable.
However, these statements involve a number of risks and uncertainties that may lead to different results.
The risks related to these statements are included but not limited to fluctuations of sales volume, foreign exchange at the cost of ability to manage growth.
I urge you to consider the quarterly numbers are not a reflection of long-term trends or indication of full year results.
They should not be attempted to be extrapolated or interpolated into a full year number.
With this that said I will now hand over the call to management.
Thank you, sir.
Probal Sen: · Has anything moved on adopting or implementation of this policy as of date?
Has anything moved on adopting or implementation of this policy as of date?
Secondly, with respect to the volume growth obviously the overall H1 growth has been impacted by the fact that Q1 had a fairly low volume growth.
This quarter I believe MD sir mentioned about roughly around 4% YOY growth.
Now I know you don't like to do this on a quarterly basis Mahanagar Gas Limited October 30, 2023 but based on the H1 numbers, can we draw some sense of where we stand with respect to our overall guidance?
We have consistently guided to somewhere around 5% to 6% growth targets on an annualized basis for our volumes.
But does FY24 look a little bit at risk given what H1 performance has been from a volume perspective?
One last question if I may, if you can indulge me.
The LNG sales JV with Baidyanath.
Can we get some understanding of how the revenue partnership would work, how the earnings model would work for this JV?
Moderator · Conference Operator
Our next question is from the line of Yogesh Pati from Dolat Capital.
Yogesh Pati
The recently announced Delhi EV Policy Extension has also impacted Mahanagar Gas stock price.
So, the question is how many Ola-Uber taxis are running on the roads inside 3 GAs of Mahanagar Gas and how much CNG do they consume on a daily basis?
Can you give us some idea on that side?
Moderator · Conference Operator
Our next question is from the line of Sabri Hazarika from Emkay Global.
Sabri Hazarika
Two questions from my side.
First is we have seen that you cut the prices and there's been some sort of like volume growth which has happened.
So, is the Mumbai market showing some sort of good price elasticity in terms of CNG demand in particular?
Moderator · Conference Operator
Our next question is from the line of S Ramesh from Nirmal Bang Equities.
S. Ramesh
If you were to go back to this question about the concern on the EV penetration, I know we are all possibly groping in the realm of what could happen in the future.
But when you look at your overall target of 6% growth if you take FY25-26, is a 6% volume growth achievable even if you see some progress in the EV conversion in your GAs, how do you see that?
Moderator · Conference Operator
The next question is from the line of Varatharajan Sivasankaran from Antique Limited.
V. Sivasankaran
Just wanted to understand on the commercial vehicle front, what is the promotional scheme which we are running as of now?
Moderator · Conference Operator
Our next question is from the line of Maulik Patel from Equirus.
Maulik Patel
A few questions, one, can you just give the supply breakup and what's currently the cost of LNG what was there in Q2?
How much of the APM you received and other long term or medium- term LNG contract you have?
Moderator · Conference Operator
Our next question is from the line of Niharika from Aequitas Investments.
Niharika
My question is regarding the Unison acquisition.
So, any update on that as we are already end of October?
Mahanagar Gas Limited October 30, 2023
Moderator · Conference Operator
Our next question is from the line of Vikas Jain from CLSA.
Vikas Jain
Firstly, thanks a lot.
I think after our feedback last time you have given the million kg number in the footnote for 1Q and 2Q.
Could you give me the comparable numbers for the quarter of 1Q FY23 and 2Q FY23 as well?
That's the first one.
And the second question is on a QOQ basis the decline that we see in gross margin, what could be the broad reason for that?
Because the price cut that we are talking about is something that has happened only in October.
So, from that Mahanagar Gas Limited October 30, 2023 perspective why do we see this decline?
Any particular reason for that?
So, those are my two questions.
Moderator · Conference Operator
Our next question is from the line of Amit Rustagi from UBS.
Amit Rustagi
If we have to grow our volumes from here maybe let's take 0.2 or 0.3 MMCMD, where do you think that additional gas will come from?
Do we have additional domestic sources like HPHT available to us or we have to move to spot LNG if we have to see a volume growth now?
Moderator · Conference Operator
Our next question is from the line of Kirtan Mehta from BOB Capital Markets.
Kirtan Mehta
Would you be able to give us some color on the volume growth between GA-1 and GA-2, particularly in terms of the CNG volume pickup that we are seeing?
Moderator · Conference Operator
Our next question is from the line of Yogesh Patil from Dolat Capital.
Yogesh Pati
During Q2 we have seen a jump in other expenses.
Is this because of increase in marketing cost or any specific reason or any one-off?
Moderator · Conference Operator
Our next question is from the line of Varatharajan Sivasankaran from Antique Limited.
V. Sivasankaran
In terms of upgradation of outlets, you used to give a number.
What is the kind of numbers we had last quarter and maybe in the first half also if you can give us the overall number?
This quarter as well as the previous quarter.
Moderator · Conference Operator
Our next question is from the line of Devang Patel from Sameeksha Capital.
Devang Patel
Very briefly just wanted to understand the new scheme for incentivizing CVs.
How long are you planning to offer this?
Moderator · Conference Operator
Our next question is from the line of Saurabh Handa from Citi Group.
Saurabh Handa
I had two questions.
Firstly, on the volumes of HPHT that you said were 0.28.
So, we assume out of this 0.2 MMSCMD, the contracted portion that goes for industrial commercial use and the balance is what you use for the priority sector?
Moderator · Conference Operator
Our next question is from the line of Darshit from Robocapital.in
Darshit
I just have one, rest of them are answered.
You said currently for H1 of FY24, it is 14.5 EBITDA per SCM, correct?
Moderator · Conference Operator
Our next question is from the line of Mohit Mehra from Guardian Capital.
Mohit Mehra
For this industrial and consumer incentives that we are running the 10% discount, are we still making money on the incremental volumes because the gas sourcing blend would also be different.
It would be a mix of spot and HPHT.
Moderator · Conference Operator
Ladies and gentlemen, our next question is from the line of Kirtan Mehta from BOB Capital Markets.
Kirtan Mehta
I just wanted to check on the fuel savings schemes that we are offering. the fuel card that we are offering.
So, in terms of how does the card work?
This would be the upfront initial sort of the 2- lakh card that we are doing.
Would it be immediately against the entire CNG purchase or would it be a discount on the exact numbers?
How does the card actually work?
Moderator · Conference Operator
Ladies and gentlemen that was the last question of our question-and-answer session.
I would now like to hand the conference over to the management for closing comments.
Thank you.
On behalf of PhillipCapital (India) Private Limited.
That concludes the conference call.
Thank you for joining us and you may now disconnect your lines.
(This document has been edited for improving readability) Mahanagar Gas Limited October 30, 2023
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
Moderator · Conference Operator
Thank you very much.
We will now begin the question-and-answer session.
The first question is from the line of Probal Sen from ICICI Securities.
Probal Sen: · Has anything moved on adopting or implementation of this policy as of date?
I have three questions.
Firstly, you mentioned about, of course the major discussion point which is the EV policy.
Just to get a little bit more clarity the Maharashtra Draft EV policy advocates 10% of new registrations by 2025 and 25% of EV conversion for public transport and delivery services.
Is my understanding correct?