Mahanagar Gas Q1: Shares climb 4% on strong sequential growth despite YoY profit drop

Mahanagar Gas Ltd. reported a mixed set of earnings for the June quarter, with a sharp sequential improvement in profitability helping lift investor sentiment despite a weaker year-on-year performance.

The company delivered higher revenue and a meaningful recovery in margins compared with the March quarter, prompting shares to rally more than 4% during Thursday's session.

Net profit stood at ₹193 crore for the quarter, down 39.5% from ₹319 crore in the corresponding period last year. Revenue, however, rose 13.9% year-on-year to ₹2,373 crore from ₹2,083 crore, reflecting healthy business growth despite pressure on earnings.

Operating performance also softened on an annual basis. EBITDA declined 31.5% to ₹343 crore from ₹500.6 crore a year ago, while EBITDA margin narrowed to 14.5% from 24%.

The sequential picture, however, was considerably stronger. Net profit surged 49% from ₹130 crore in the March quarter, while revenue increased 15.6% from ₹2,052 crore. EBITDA rose nearly 32% quarter-on-quarter to ₹343 crore, and operating margin improved to 14.5% from 12.7%.

The stronger quarter-on-quarter performance appeared to reassure investors, with Mahanagar Gas shares rising to an intraday high of ₹1,151.20, up more than 4% on the NSE following the earnings announcement.

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While the year-on-year comparison reflected pressure on profitability, the June quarter suggested an improvement in operating momentum compared with the preceding quarter.

Mahanagar Gas is one of India's leading city gas distribution companies, supplying compressed natural gas (CNG) for vehicles and piped natural gas (PNG) to domestic, commercial and industrial consumers. Its operations span Mumbai, its adjoining metropolitan regions and neighbouring districts, making it one of the country's key urban gas distributors.