MGL — earnings call
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Prepared remarks
Moderator · Conference Operator
MR. NITIN TIWARI – PHILLIPCAPITAL (INDIA) PRIVATE
LIMITED · Management
Mahanagar Gas Limited July 26, 2024
Moderator · Conference Operator
Ladies and gentlemen, good day and welcome to the Mahanagar Gas Limited Q1 FY '25 Earnings Conference Call, hosted by PhillipCapital (India) Private Limited.
As a reminder, all the participants’ line 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 have the conference over to Mr. Nitin Tiwari from PhillipCapital (India) Private Limited.
Thank you and over to you, sir.
Nitin Tiwari
Good evening, ladies and gentlemen.
On behalf of PhillipCapital (India) Private Limited, I welcome everyone to first quarter FY '25 Earnings Call of Mahanagar Gas Limited.
We have the pleasure of having with us today the senior management team from MGL 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.
Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in the nature, and we believe that expectations contained in the statement are reasonable.
However, these statements involve a number of risks and uncertainties that may lead to different results.
We urge you to consider that quarterly numbers are not a reflection of long-term trends or indications of the full year results.
And this should not be attempted to be extrapolated or interpolated into full-year numbers.
With that, I will now hand over the call to management.
Over to you, sir.
Probal Sen: · Got it. The last question, if I may, if you can give, given the very strong volume growth numbers
So, sir, just extrapolating, this obviously means that our share of term LNG and spot LNG will continue to increase, assuming this because our volumes are also going up and the rate of decrease is fairly sharp the last few quarters.
So, in terms of margins then, is Q1 run rate basically something that we should be sustaining?
Or is there some scope for improvement, particularly spot LNG prices remain at the moderate levels that we have been seeing for the last few months?
Got it.
The last question, if I may, if you can give, given the very strong volume growth numbers we have been seeing in the last couple of quarters, guidance obviously has been raised in a way by the management anyways to about 7% plus.
Should we still hold on to that?
And if you can kindly also give Unison what kind of growth should be there, given the relatively smaller base for at least '25 and '26, any indication, sir?
So, mid-teens is what we should be working with, sir, roughly, on an annualized basis?
Moderator · Conference Operator
Thank you.
The next question is from the line of Yogesh Patil from Dolat Capital.
Please go ahead.
Yogesh Patil
Congratulations for the great set of numbers.
Sir, wanted to know about, considering the strong CNG volume growth, we wanted to know the CNG vehicle addition details during the quarter.
And do you have any updates on the CNG buses addition by the MSRTC?
Moderator · Conference Operator
The next question is from the line of S.
Ramesh from Nirmal Bang Equities.
Please go ahead.
S. Ramesh
Basically on Unison Enviro, based on the volumes you have achieved so far, what is the kind of top line you have booked this quarter?
And how do you see the EBITDA per SCM for the quarter and for the coming quarters in FY '25?
And how do you see that improving, say, in FY '26?
Moderator · Conference Operator
Thank you very much.
The next question is from the line of Sabri Hazarika from Emkay Global.
Please go ahead.
Sabri Hazarika
Congratulations on the good numbers.
So, just two questions.
Firstly, on the LNG you've given the revenue, but what is the current unit economics of the LNG station?
So, you've got 1 right now, so how much was the sales and what was the margin profile?
And what are your plans for LNG for the next one year as well as for the next three, four years?
Moderator · Conference Operator
Thank you.
The next question is from the line of Rajesh Aynor from Athena Investment.
Please go ahead.
Rajesh Aynor
Sir, can you please shed some more light on the volume growth which we have achieved in the last two quarters?
Sir, the trajectory seems to be moving upwards, what exactly has been the reason?
Are these reasons sort of sustainable?
Why I am asking is because despite this, you are still guiding for around 5% to 6% kind of growth for the future years.
So, some more color on that will be helpful.
Moderator · Conference Operator
Thank you very much.
The next question is from the line of Kirtan Mehta from BOB Capital Markets.
Please go ahead.
Mahanagar Gas Limited July 26, 2024
Kirtan Mehta
I just wanted to check on the volume guidance that we are keeping in 6% to 7% range while we are running at 12% to 13%, and we have a good visibility on the industrial sort of doing a double- digit growth over two years.
So, which is the area where we expect the normalization to come through?
Or which is running at a higher than the sort of the rate which may not sustain?
Any thoughts or any color on this?
Moderator · Conference Operator
Thank you.
The next question is from the line of Gagan Dixit from Elara Securities.
Please go ahead.
Gagan Dixit
Sir, my question is regarding, in the past basically MGL was adding 20 to 25 CNG outlet, now you are targeting almost 50 CNG outlets per annum.
So, what is the change actually that you see?
Mahanagar Gas Limited July 26, 2024 I mean, what are the easy ways you find to add to double this, something, your CNG outlets rates per annum?
I think if you give some color over that.
Moderator · Conference Operator
Thank you.
The next question is from the line of Lokesh Manik from Valium Capital.
Please go ahead.
Lokesh Manik
Sir, if you can just share details on this 4% Q-o-Q growth in CNG geography wise, which geography was the main driver for this group it would be great.
Moderator · Conference Operator
The next question is from the line of Sagar Kapadia from Prabhudas Liladhar.
Please go ahead.
Sagar Kapadia
Sir, in the last quarter conference call you had mentioned that in Q3 FY ’24, 67; and Q4 FY ’24, 97, these were the medium and heavy commercial vehicles addition you are referring to, right?
Moderator · Conference Operator
Thank you.
The next question is from the line of Somaiah V. from Avendus Park.
Please go ahead.
Somaiah V.
I was looking for Unison in terms of next couple of years for the year FY ‘25 and ’26, what is your expectation in terms of volume growth?
Moderator · Conference Operator
This is a very welcome thing which we appreciate the effort taken by Bajaj and other OEs to design and then launch successfully these type of application for CNG, which is a very welcome thing for the industry.
Thank you.
The next question is from the line of Anuj Sharma from M3 Investment.
Please go ahead.
Anuj Sharma
My question is, you touched upon it a while ago.
See, the economics of the government transport with respect to electricity and CNG, earlier the data would have been scarce, but how do you Mahanagar Gas Limited July 26, 2024 perceive the economics of electric BEST bus or MSRTC bus versus a CNG bus?
How is it evolving also, that will be a little helpful.
Moderator · Conference Operator
Thank you.
Ladies and gentlemen, that was the last question for today.
I now hand the conference over to the management for closing comments.
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 July 26, 2024
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
Ashu Singhal
A very good afternoon to all of you.
Thank you, Nitin, for organizing this.
So, good afternoon to all the investors on this earnings call of Mahanagar Gas Limited for the first quarter of the Financial Year ‘24-'25.
I would like to thank you all for attending our Earnings Call.
MGL continued to create CGD infrastructure across its business segments in the licensed areas.
During the quarter, 35,544 domestic households were connected, and thus we have established connectivity for nearly 2.53 million households.
We have laid 85.51 kilometer of steel and PE pipelines, taking the total length to over 7,054 kilometers.
We have added 2 CNG stations during this quarter, and with this we have 348 stations as on 30th June, '24.
We also have added 104 industrial and commercial customers during this quarter, and therefore as on 30th June, we have 4,845 industrial and commercial customers.
In respect of our Raigad GA, we have connected 80,854 domestic households and 47 CNG stations, which are currently under operation.
During the quarter, we have laid 8 kilometers of pipeline in Raigad, thereby taking the total length of pipeline to 424 kilometer in Raigad.
Mahanagar Gas Limited July 26, 2024 With respect to Unison Enviro Private Limited, a wholly owned subsidiary of MGL, the company has added 1 CNG station during this quarter and has a total of 57 CNG stations as on 30th June.
During the quarter, 341 domestic households were connected, and cumulative household connections are 27,339 and UEPL has 57 industrial and commercial customers as on 30th June.
Overall, average gas sales for Q1 of the current year compared to the corresponding Q1 of the previous years has increased to 3.858 mmscmd from 3.412, which is an increase of 13.1%.
Compared to Q1 of the current year compared to corresponding Q1 in previous year, sales volume in case of CNG has increased from 2.481 to 2.772 mmscmd, which is an increase of 11.7%.
Sales volume for the domestic PNG has increased from 0.496 to 0.547 mmscmd, which is an increase of 10.4%.
In the case of industrial and commercial sales, commercial sales volume has increased from 0.435 to 0.539 mmscmd, which is an increase of 23.8%.
During the quarter, we achieved overall average sales of 3.585 mmscmd as against 3.779 in the previous quarter, which is an increase of 2.1%.
The current quarter volume consists of CNG volume of 2.772 and domestic PNG volume of 0.547, while 0.539 mmscmd of gas has been supplied to industrial and commercial segments.
Compared to the previous quarter, sales volume in the case of CNG has increased from 2.666 to 2.772 mmscmd, which is an increase of 4.01%.
However, in the case of industrial and commercial, sales volume has marginally decreased from 0.55 to 0.539 mmscmd, with a decrease of 2.13%.
The sales for domestic PNG have marginally decreased from 0.563 to 0.547 mmscmd, which is a decrease of 2.8%.
As per our past trend, it is observed that generally PNG volumes remain same or little lower maybe due to school vacations and other seasonal reasons.
Current quarter EBITDA is Rs.
418 crores compared to the previous quarter EBITDA of Rs.
394 crores.
EBITDA margin is 26.33% for the current quarter as compared to the previous quarter of EBITDA margin of 25.13%.
Net profit after tax is Rs.
285 crores for the quarter as compared to Rs.
265 crores in the previous quarter, an increase of 7.4%.
Coming to UEPL, Unison Enviro Private limited.
During the quarter, they have achieved an overall average sales volume of 0.168 mmscmd as against 0.146 mmscmd in the previous quarter, which is an increase of 14.51%.
Current quarter volume consists of CNG volume of 0.165 mmscmd and PNG volume of 0.01 mmscmd.
Therefore, MGL as a consolidated entity has achieved total sales volume for the quarter of 4.026 mmscmd.
There's a recent launch of CNG two-wheeler with Bajaj on 5th July, and also there has been announcement by TVF for introducing CNG scooters around first half of 2025.
It has opened up new set of customers for CGD companies, and MGL sees it as another volume growth opportunity considering the large number of two wheelers in the country.
And we are gearing up to cater to this segment.
With this I conclude and would now like to open the floor for questions.
Thank you very much.
Mahanagar Gas Limited July 26, 2024
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.
Please go ahead.
Probal Sen: · Got it. The last question, if I may, if you can give, given the very strong volume growth numbers
Good evening, sir.
A couple of questions.
Number one, what was the percentage of priority sector allocation for this quarter?
And any sense you can give us in terms of what that number would be for the rest of the year?