Mahanagar Gas made a blockbuster debut on stock markets today. Its shares jumped over 30 per cent to an intraday high of Rs 548.95 against its issue price of Rs 421.
Analysts believe that Mahanagar Gas is a long-term growth story as still a lot of vehicles in Mumbai are yet to be converted to CNG.
“We think it is a good long term growth story. It is a cash rich company, which will generate free cash continuously going forward and the business is such that they don’t need to borrow at all,” R Sreesankar, head institutional equities at Prabhudas Lilladher told NDTV Profit.
The company also sees a big potential for growth. SM Ranade, CFO at Mahanagar Gas told NDTV Profit that there are nearly 18 lakh vehicles in Mumbai area which can be converted into CNG but out of that only 4.7 lakh vehicles have been converted till now.
Similarly, out of the 30 lakh potential households only 25-27 per cent have shifted to piped gas connection, he said. The company is planning to add 1.25 lakh new connections every year.
Mahanagar Gas had mopped up Rs 1,040 crore through its initial public offer (IPO), which closed on June 23.
Mahanagar Gas’s IPO was subscribed 64.54 times, driven by huge demand from institutional investors. The institutional investors segment was subscribed 191.61 times followed by qualified institutional investors segment, which saw subscription of 72.84 times. Even the retail investors segment saw a good response with 6.82 times subscription.
Through this IPO, Mahanagar Gas’s promoters GAIL and British Gas have offloaded 12.5 per cent stake each in the company.
As of 1.10 p.m., Mahanagar Gas shares traded 25.28 per cent higher at Rs 527.45 as compared to a 0.77 per cent gain in Sensex.