MGL — earnings call
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Prepared remarks
at it? · Opex for SCM, sir. If I look at the average, for example, till about Q4 for the last several quarters,
Mahanagar Gas Limited Q4 FY24 Results Conference Call May 10, 2024
Moderator · Conference Operator
MR. SABRI HAZARIKA -- EMKAY GLOBAL FINANCIAL SERVICES.
Ladies and gentlemen, good day, and welcome to the Q4 FY '24 Results Conference Call of Mahanagar Gas Limited, hosted by Emkay Global Financial Services.
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 star then zero on your touchtone phone.
Please note that this conference is being recorded.
I now hand the conference over to Mr. Sabri Hazarika from Emkay Global Financial Services.
Thank you, and over to you, sir.
Mahanagar Gas Limited May 10, 2024
Sabri Hazarika
Good afternoon.
On behalf of Emkay Global, I'd like to welcome you all to the Q4 FY '24 Post-
Probal Sen: · Understood. The second question was with respect to the gas cost. Just wanted to know what
Sir, as a recurring number, sir, we should continue to see it around basically the INR5.9 to around INR6 in SCM kind of a range, adjusted, of course, for inflation impact.
Is that a fair way to look
at it? · Opex for SCM, sir. If I look at the average, for example, till about Q4 for the last several quarters,
Opex for SCM, sir.
If I look at the average, for example, till about Q4 for the last several quarters, it was at somewhere around INR5.7 to INR5.8 per SCM, including, of course, raw material charges.
construction season. · Apart from that, let's say, whatever is the spending on account of CSR expenses, those are also
Apart from that, let's say, whatever is the spending on account of CSR expenses, those are also if there is something unspent which gets booked in the last quarter.
So all this put together may be accounting for around 20-25 paise Opex higher, of course, but the marketing expenses are one of its kind.
And depending on how frequently we take up such activity, it could be there.
Otherwise, it may not impact the Opex as such on an ongoing basis.
Probal Sen: · Understood. The second question was with respect to the gas cost. Just wanted to know what
Understood.
The second question was with respect to the gas cost.
Just wanted to know what was the priority gas allocation as a percentage this quarter.
And is that the primary reason why there is a Q-o-Q increase in the gas cost per unit?
Is that a fair way to look at it?
Mahanagar Gas Limited May 10, 2024
Right.
And going forward, sir, basically, if I can get a sense in terms of the sourcing mix now, given that volumes will also increase by maybe around -- as the guidance given, 5.5%, 6%, will we need to source basically higher spot LNG, given the trend in this lower -- consistently declining allocation?
Sir, one last question or suggestion, if I may.
If I look at the kind of improvement that's happening in terms of our cash flows, in terms of our operating cash flows and in terms of our free cash flow, there is a lot of leeway in terms of either increasing dividend or looking at more substantial acquisitions itself.
Just wanted your thoughts on how the management is looking at capital deployment because the danger is that this kind of surplus cash flow getting generated, your return ratios can see a little bit of moderation even if enough capital deployment avenue is not there.
What's your thoughts on that will be appreciated.
Moderator · Conference Operator
The next question is from the line of Niharika from Aequitas Investments.
Niharika
My first question is what is the breakup of the intangible asset of INR520 crores in the consolidated balance sheet?
And this is over and above the goodwill of INR71 crores.
Moderator · Conference Operator
The next question is from the line of Yogesh Patil from Daulat Capital.
at it? · Opex for SCM, sir. If I look at the average, for example, till about Q4 for the last several quarters,
Sir, you just mentioned that total term contracts are of 0.75 mmscmd.
Can you please provide the breakup in terms of how much is Henry Hub, Brent link and the KG-D6 HPHT?
And 0.75, we are not utilizing completely?
Okay.
Sir, second question, vehicle addition details.
How many CNG vehicle additions you have noticed in Q4?
And how many of them are passenger vehicles, commercial vehicles, taxis and autorickshaws?
Along with this, if you could share the MSRTC CNG bus additions in the last 3 months and expected additions in the next 6 months?
Okay.
Okay.
Sir, one question related to volumes.
Your company has stopped providing CNG discount coupons from 1st Jan 2024 for the passenger vehicles.
And we see quarter-on-quarter CNG volume growth is quite muted in Q4. So is this a right way to analyze the muted growth over quarter-on-quarter for the CNG?
Or is there any reason Q-on-Q growth for the CNG volume is only 1%?
Okay.
And the last one, your company completed the acquisition of 3 new GAs in February.
So the volume of these 3 GAs are included in the reported volume, which we reported 3.79 mmscmd.
Please correct me if I'm wrong on this side.
Moderator · Conference Operator
The next question is from the line of Kirtan Mehta from BOB Capital Markets.
Kirtan Mehta
Just wanted to understand more about the volume growth.
From the INR25 crores scheme expenses that we have done this time, what is the translation of the benefit in terms of the number of vehicle additions?
And was it primarily for the MHCV segment where we have spent this incentives?
Moderator · Conference Operator
The next question is from the line of Vivekanand Subbaraman from AMBIT Capital.
Vivekanand Subbaraman
Can you explain to us the commissions that you're paying to the OMCs for hosting -- for the sale of CNG through their outlets?
That's question one.
Secondly, you have commitments to invest in CBG.
When is your first plant coming on stream?
And what's the potential that you're looking at in terms of substituting your current sourcing of either HPHT gas or RLNG with CBG over the next 3 years?
Moderator · Conference Operator
The next question is from the line of S.
Ramesh from Nirmal Bang Equities.
S. Ramesh
Sir, if you look at your consolidated results and try to break it up, I get a revenue of around INR56 crores and a loss of INR12 crores before tax and the gross contribution of INR31 crores, presumably for the Unison Enviro and the gross margin seems to be very high, if we just take February, March volumes on that 0.14 run rate.
Sir, can you give us some sense in terms of what is the aggregate volume MGL has done for February, March in the consolidation?
And what is the gross margin?
And when do you expect to turn around this PBT loss to EBITDA positive?
We don't know whether the EBITDA is positive or positive gross margin.
So what is the reading in terms of how much it can grow in FY 2025-26?
And what is the kind of EBITDA run rate you can expect, say, over the next 2 years?
And when do you expect to see positive profits at the pre-tax level?
Moderator · Conference Operator
The next question is from the line of Nitin Tiwari from Philip Capital.
Nitin Tiwari
Just a few bookkeeping questions.
So if you can help me with the CNG sales in kgs and also the breakup of industrial and commercial sales in respective industrial and commercial segments?
Currently, I do not know if you can give the breakup of total number of I&C customers that you mentioned between industrial and commercial customers.
So that would be one.
Moderator · Conference Operator
The next question is from the line of Dhaval Joshi from Dymon Asia.
Dhaval Joshi
I'm sorry, I joined in a bit late.
If you can just let me know about the volume guidance that you've given for FY 2025-26, volume growth guidance?
Moderator · Conference Operator
The next question is from the line of Amit Rustagi from UBS.
Amit Rustagi
And for posting a wonderful result on the volume front.
Sir, my question pertains to the CNG stations.
So we have added a historic number of 36 stations this year.
So can you guide us like how many stations we can expect to add in the coming years, like FY 2025 and 2026?
And when most of these stations came, where they came in first half or did the stations came in second half?
And then based on the last 2 quarters, we're seeing we are posting double-digit growth.
So can we expect that we can move to a growth number of 8% to 9%, given the strong addition of CNG stations and the past 2 quarters' performance?
Mahanagar Gas Limited May 10, 2024
Moderator · Conference Operator
The next question is from the line of Hemang Khanna from Nomura.
Hemang Khanna Firstly, could you please help us get a sense of what will be your CapEx guidance for FY 2025, 2026 and 2027?
And the second question is relating to, could you give us the realizations for the industrial and commercial segments individually?
The next question is from the line of Somaiah V., from Avendus Spark.
Somaiah V
Sir, first question is on the CBG plant that you said.
So what would be the CapEx for that 70,000 volume that you said?
Moderator · Conference Operator
The next question is from the line of Sunil Shah from 3PMS.
Sunil Shah
Sir, I somehow missed your statement earlier, so I just wanted to confirm that.
Sir, the acquisition that we have done where there are those 3 geographical areas, there are already 55 existing CNG stations in that locality and majority of them are not online.
Is that the correct sense?
Mahanagar Gas Limited May 10, 2024
Ashu Shinghal
That's right.
Around 50 to 55 stations are already functional.
I mean, earlier it was 49 plus 7 were added, so around 56 stations are there, which are operating in these 3 geographical areas.
Most of them are DBS, i.e., daughter booster station and only very few are online stations.
Sunil Shah
Okay.
Sir, so like in any other geographical area where, in Bombay, Thane, Raigad, we have virtual monopoly, it applies to these 3 new geographical areas as well, like we'll be the only supplier over a period of time?
Moderator · Conference Operator
Ladies and gentlemen, due to time constraints, that was the last question.
I now hand the conference over to the management for closing comments.
Thank you.
On behalf of Emkay Global Financial Services, that concludes this conference.
Thank you for joining us, and you may now disconnect your lines.
Thank you.
(This document has been edited for improving readability) Mahanagar Gas Limited May 10, 2024
Registered Address
MGL House, G-33 Block, Bandra-Kurla Complex, Bandra (East), Mumbai – 400051, Maharashtra
Contact details
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Website
www.mahanagargas.com
CIN
L40200MH1995PLC088133
Questions and answers
Moderator · Conference Operator
The first question is from the line of Probal Sen from ICICI Securities.
Probal Sen: · Understood. The second question was with respect to the gas cost. Just wanted to know what
I have a couple of questions.
Firstly, in terms of the cost in this quarter, there seems to be a sudden increase in the operating expenditure in the sense that other Opex has gone up very sharply and Opex for SCM is also probably the highest we've seen in the last 6 quarters.
We just wanted to understand the reasons for this, sir.