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Mahanagar Gas Limited — Q1 FY26 earnings call

Call held 23 Jul 2025

Management summary

Mahanagar Gas reported strong financial performance in Q1 FY26 with significant QoQ growth in EBITDA and PAT, driven by overall gas sales volume increasing 9.61% YoY. The company also saw robust growth in its Industrial and Commercial segment. The merger with UEPL received NCLT approval, marking a key strategic milestone. However, CNG volume growth slowed, and the potential impact of new PNGRB tariffs remains a watch item.

Highlights

Overall average gas sales volume increased by 9.61% YoY to 4.229 mmscmd in Q1 FY26.
Industrial and Commercial sales volume saw a robust 26.09% YoY growth, reaching 0.679 mmscmd.
EBITDA from operations grew by 28% QoQ to INR 485 crores in Q1 FY26.
Net profit after tax increased by 29% QoQ to INR 324 crores.
The amalgamation of UEPL with MGL was approved by NCLT, expected to be effective by August 15, 2025.

Concerns

CNG sales volume growth slowed to 7.54% YoY in Q1 FY26, compared to higher growth in previous quarters, attributed to lower new vehicle additions and declining BEST volumes.
Operating expenses per unit were INR 6.6 per SCM in Q1 FY26, slightly higher than the typical range of INR 6-6.2.
Uncertainty regarding the full impact of PNGRB's zone-wise tariff implementation on margins.

Key financials

01 Overall Gas Sales Volume 4.229 mmscmd +9.6%YoY
02 CNG Sales Volume 2.981 mmscmd +7.5%YoY
03 Industrial & Commercial Sales Volume 0.679 mmscmd +26.1%YoY
04 EBITDA ₹485 Cr +28%QoQ
05 PAT ₹324 Cr +29%QoQ
06 EBITDA per SCM (excl. one-time reversal) ₹10 0%QoQ

What they filed

Q1 FY27: revenue up 14.0%, net profit down 39.4% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	1,786	1,758	1,963	2,081	2,049 +15%	2,058 +17%	2,051 +4%	2,372 +14%
Expenses	1,373	1,443	1,568	1,581	1,711	1,706	1,791	2,029
EBITDA	413	314	395	501	338 −18%	352 +12%	260 −34%	343 −32%
Margin	23%	18%	20%	24%	16%	17%	13%	14%
Other income	47	46	42	32	29	29	29	30
Interest	3	3	4	4	5	6	5	6
Depreciation	84	79	95	96	104	103	106	109
Profit before tax	373	278	338	432	258 −31%	272 −2%	178 −47%	259 −40%
Tax rate	23%	19%	28%	26%	25%	26%	26%	25%
Net profit	287	225	242	320	193 −33%	202 −10%	132 −45%	194 −39%
EPS	29.03	22.82	24.53	32.35	19.58	20.45	13.36	19.61

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Unison Enviro Private Limited (UEPL)
0.225 mmscmd Average Sales Volume0.204 mmscmd CNG Sales Volume₹16 Cr EBITDA
MGL Consolidated
4.455 mmscmd Total Gas Volume Sales
MGL GA-1
1.9 mmscmd Volume
MGL GA-2
2 mmscmd Volume
MGL GA-3
0.324 mmscmd Volume

Capital allocation

high confidence

Capex ₹1,100 Cr through debt and equity both for CBG project
- Core business CAPEX (MGL + UEPL) ₹1,100 Cr
- IBC (battery venture) first phase cost (MGL's 40% stake) ₹350 Cr
- CBG project (MGL equity investment) ₹130 Cr
- GA-3 CAPEX (FY26) ₹200 Cr
- CNG stations (MGL+UEPL, 80 stations) ₹300 Cr
- Steel trunk line (mainly UEPL and GA-3) ₹250 Cr
- Other CAPEX (CRM, O&M, IT) ₹50 Cr
Coming to Company level, MGL core business CAPEX, along with UEPL, we should be incurring anywhere in the range of INR1,100 crores to INR1,300 crores for the next two years at least, okay? Coming to IBC, the first phase cost is roughly INR850 crores-odd, of that roughly INR350 crores to INR380 crores will be contributed by MGL, that is the range for the 40% stake in that Company. And this should happen gradually. At least the first phase is going to get completed by around April to June next year. So, at least 50% or more will go in the first phase. And maybe in the next six months, balance will go, okay? So, we expect from here around 18 months' time in a phase manner that outflow will happen. We have already paid INR35 crores, INR36 crores. So, balance INR300 crores or a little more than INR300 crores will be there in the next 1.5 years' time, okay? As far as CBG is concerned, the overall project cost is in the range of INR600 crores to INR650 crores, okay? This was an assessment sometimes back. We may have to reassess the cost. But as far as investment by MGL is concerned, since there is a JV partner, and there is going to be funding through debt and equity both, equity from MGL side should be in the range of around INR130 crores.
M&A Unison Enviro Private Limited (UEPL) Merger · Closed

Consolidation of operations and tax benefits from unabsorbed depreciation and faster eligibility for depreciation on CAPEX.
Tax benefits on account of merger definitely, mainly timing difference for individual CAPEX of UEPL.

A scheme of amalgamation of UEPL with MGL was filed with NCLT in December '24. The NCLT has approved the scheme of amalgamation and pronounced its final order on 9th July with February 1, 2024 as appointed date of amalgamation. The scheme will become effective upon filing of the certified copy of NCLT order with the ROC, Maharashtra.

Guidance & targets

Capex

MGL core business CAPEX (MGL + UEPL) Capex · next two years · High confidence INR 1,100-1,300 crores

Coming to Company level, MGL core business CAPEX, along with UEPL, we should be incurring anywhere in the range of INR1,100 crores to INR1,300 crores for the next two years at least, okay?

— Management
GA-3 CAPEX Capex · FY26 · High confidence INR 200 crores

GA-3 CAPEX planned for this year '25-'26 is in the range of INR200 crores.

— Management

Project Completion

IBC (battery venture) first phase completion Project Completion · next year · High confidence April to June next year

At least the first phase is going to get completed by around April to June next year.

— Management

Investment

IBC (battery venture) MGL balance investment Investment · next 1.5 years · High confidence INR 300+ crores

So, balance INR300 crores or a little more than INR300 crores will be there in the next 1.5 years' time, okay?

— Management
CBG project MGL equity investment Investment · High confidence INR 130 crores

equity from MGL side should be in the range of around INR130 crores.

— Management

Merger Completion

UEPL amalgamation effectiveness Merger Completion · August 2025 · High confidence by August 15

So, in our view, everything should get over by 15th of August, and you will see Quarter 2 as single entity for MGL and UEPL, okay?

— Management

CNG Infrastructure

New CNG station additions (MGL + Unison) CNG Infrastructure · this year · High confidence 80 stations

But this year, we target around 80 new stations to be added.

— Management
Large CNG stations (Sion, Wadala) commissioning CNG Infrastructure · 7-8 months · High confidence 7-8 months

commission one in Sion, that is in Wadala and the other one will be also commissioned in seven, eight months time.

— Management

Volume Growth

MGL Volume Growth Volume Growth · FY26 · Medium confidence high single-digit

for this financial year, although we have said that nearing double-digit or high single-digit volume growth is expected, which we expect, again, high single-digit number should be there by the end of this financial year.

— Management
UEPL Volume Growth Volume Growth · every year for next 2-3 years · High confidence 30%

And we expect that growth should be in the range of 30% every year this year, maybe in next two, three years.

— Management
GA-3 Volume Growth Volume Growth · FY26, FY27 · Medium confidence 15-20%

FY '26, '27, I think it should grow at, at least 15% to 20%.

— Management
GA-3 Volume Growth (alternative) Volume Growth · FY26, FY27 · Low confidence 30%

Probably a bit more, same as UEPL around 30% or so.

— Management

Profitability

EBITDA per SCM Profitability · FY26 year-end · Medium confidence INR 9.5

So, we expect around INR 9.5 or so by the year end the margins number.

— Management

Regulatory Impact

PNGRB tariff impact on CNG Regulatory Impact · Medium confidence INR 0.60-0.70 per kg

Regarding the tariff, it will be around INR0.60, INR0.70 per kg CNG impact.

— Management

LNG Infrastructure

Mahanagar LNG (MLPL) stations LNG Infrastructure · by year-end · High confidence 6-7 stations

So, 1 will be in Bhiwandi, 1 will be in JNPT and one will be in Amravati and 1 more we are exploring in Maharashtra. So, by the year end, we expect around in total MGL including maybe 6-7 stations will be there.

— Management

What to watch in Q2 FY26

UEPL amalgamation completion

next quarter

Current NCLT approved, pending ROC filing

Target Effective by August 15, 2025, with consolidated reporting

Why it matters

Consolidation of UEPL operations will impact MGL's overall financials and operational scale.

So, in our view, everything should get over by 15th of August, and you will see Quarter 2 as single entity for MGL and UEPL, okay?

Risks & concerns

CNG volume growth slowdown
medium

Q1 FY26 CNG sales volume growth of 7.54% YoY was lower than previous quarters, attributed to higher new car prices and declining BEST volumes.

Management acknowledged
PNGRB zone-wise tariff implementation
medium

Potential impact of INR 0.60-0.70 per kg on CNG, with management indicating ability to pass on some costs and leverage existing margin buffers.

Management acknowledged
Variation in APM gas allocation
low

Management noted past variations in APM allocation but expressed confidence in being well-covered by LNG term contracts and HPHT gas.

Management acknowledged

Q&A highlights

7 direct

APM net allocation and new well gas for CNG Direct

APM, this quarter, domestic is 100%, as you are aware. As far as CNG is concerned, 37% of the total CNG volume were catered through APM gas. New well gas was roughly 0.5 million.

Clarified the mix of gas sources for CNG and domestic segments, which impacts cost structure.

Asked by Probal Sen

Cost of gas per unit remaining flat despite Henry Hub decline Direct

See, average APM received in Q4 was around 47%. Against that, APM received in this Q1 is around 37%, okay? And that 10% reduction has been replaced by NWG and other gases. So, more or less, the increase in the cost due to reduction in APM and reduction in rates of other gases has compensated and roughly cost of gas per molecule on a weighted average basis has remained same.

Explained the stability of gas cost despite market price movements, indicating effective sourcing strategy.

Asked by Yogesh Patil

Slowdown in CNG volume growth Direct

Well, it is very difficult to pinpoint exactly what are the reasons because we typically do not have data at that level of granularity. But if you look at trends, our BEST volumes have been going down. Then in Q1, the number of new vehicles sold is also down. The second part was, there has been a slowdown in new vehicle addition in this quarter primarily because there has been a significant increase in the price of new cars.

Provided reasons for the observed slowdown in CNG volume growth, including external market factors and specific customer segment trends.

Asked by Yash Nandwani

UEPL unabsorbed depreciation and tax losses benefit post-merger Direct

But once it is a single entity, all the capital expenditure will become eligible for depreciation because as a single entity, it is a profit-making entity. And there will be some tax benefits on account of merger definitely. So, these are the two aspects on which there will be tax benefits.

Confirmed the financial benefits of the UEPL merger, specifically related to tax optimization.

Asked by Amit Murarka

Declining throughput per station Direct

Look, typically, a good chunk of these new stations are coming up in the daughter booster more because in far-flung areas of GA-2 and GA-3, our pipelines have not yet reached. The typical throughput of a daughter booster station is much lower than the throughput of our online station. So, if the ratio of daughter boosters to online is higher, the overall throughput decreases.

Explained the operational dynamics behind lower throughput per station, linking it to network expansion strategy.

Asked by Amit Murarka

Breakdown of CAPEX Direct

If I'm putting 80 stations, somewhere in the range of - I am talking about UEPL as well as MGL both, it should be around INR300 crores to INR350 crores... Then another INR250 crores, INR300 crores will go mainly into steel trunk line... Some part could be there for other CAPEX like INR50 crores to INR100 crores.

Provided a detailed breakdown of the planned CAPEX across various infrastructure components and segments.

Asked by Varatharajan

MSRTC hybrid CNG/LNG buses and potential volume compensation Direct

Currently around 600 buses of MSRTC are running, and they had added some more buses in the last few months. However, there is some potential because as they are having a fleet of around 18,000 buses, but that is all across Maharashtra, and they are, I mean, having both the options. They are also exploring LNG option and CNG option. So, we are in touch with them.

Discussed potential new volume sources from MSRTC buses to offset declining BEST volumes, highlighting future growth avenues.

Asked by Sagar Kapadia

PNGRB zone-wise tariff impact on margins Partial

Regarding the tariff, it will be around INR0.60, INR0.70 per kg CNG impact. But we will see when it is implemented and what are the final numbers for both the zones. And some of it if required, we can pass on to the customer.

Addressed the potential impact of new regulatory tariffs, indicating a strategy to manage the effect on margins.

Asked by Nitin Tiwari

2 min read 6 chapters

Detailed narrative

Robust Q1 FY26 Financial Performance

Mahanagar Gas reported a strong Q1 FY26 with overall average gas sales increasing by 9.61% YoY to 4.229 mmscmd. This volume growth translated into a 28% QoQ rise in EBITDA from operations to INR 485 crores and a 29% QoQ increase in Net Profit After Tax to INR 324 crores. The EBITDA per SCM, excluding a one-time trade margin reversal, remained stable at INR 10, consistent with Q4 FY25.

Strategic UEPL Amalgamation Approved

The National Company Law Tribunal (NCLT) approved the scheme of amalgamation of Unison Enviro Private Limited (UEPL) with Mahanagar Gas Limited on July 9, 2025, with February 1, 2024, as the appointed date. This merger is expected to become effective by August 15, 2025, upon filing with the ROC. Management anticipates tax benefits from unabsorbed depreciation and faster eligibility for depreciation on UEPL's capital expenditure post-merger.

Mixed Trends in Volume Growth

While overall gas sales grew, CNG sales volume growth slowed to 7.54% YoY in Q1 FY26, compared to higher rates in previous quarters. This deceleration was attributed to a decline in new vehicle additions, partly due to increased car prices, and a reduction in volumes from BEST buses (down from 125,000 Kgs/day last year to 98,000 Kgs/day). Conversely, the Industrial and Commercial segment showed strong growth of 26.09% YoY, reaching 0.679 mmscmd.

Significant Capital Expenditure Plans

MGL plans substantial CAPEX, with INR 1,100-1,300 crores earmarked for core business expansion (MGL and UEPL) over the next two years. This includes INR 300-350 crores for adding 80 new CNG stations and INR 250-300 crores for steel trunk lines. Additionally, MGL is investing INR 350-380 crores (40% stake) in the first phase of an IBC (battery venture) project and INR 130 crores as equity in a CBG project, with the latter having an overall cost of INR 600-650 crores.

Gas Sourcing and Margin Management

In Q1 FY26, domestic APM gas accounted for 100% of domestic supply and 37% of total CNG volume, with approximately 0.5 mmscmd from new well gas. Despite fluctuations in Henry Hub prices, the average cost of gas per unit remained flat, as a reduction in APM allocation was offset by lower rates of other gases. Management expects EBITDA per SCM to be around INR 9.5 by year-end FY26, acknowledging potential impacts from PNGRB's zone-wise tariff of INR 0.60-0.70 per kg on CNG, which they believe can be partially passed on to customers.

Network Expansion and Future Growth Drivers

MGL continues to expand its infrastructure, connecting 16,348 domestic households and laying 79.08 km of pipelines in Q1 FY26. The company aims to add 80 new CNG stations this year across MGL and UEPL geographies. Mahanagar LNG Limited (MLPL) plans to add 6-7 LNG stations by year-end, and two large CNG stations in Sion and Wadala are expected to be commissioned within 7-8 months. UEPL is projected to achieve 30% volume growth annually for the next 2-3 years, while GA-3 is targeted for 15-20% growth in FY26-27.

This is an AI-generated summary of a publicly available earnings call transcript.

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