Shares of Mahanagar Gas (MGL) rallied 7 per cent to hit a 52-week excessive of Rs 969.60 in Monday’s intra-day commerce, after the pure fuel distribution firm introduced the acquisition of metropolis fuel distribution firm Unison Enviro Private Limited (UEPL) for Rs 531 crore.
“Mahanagar Gas Limited (MGL or the Company) has signed a Share Purchase Agreement (SPA) with Unison Enviro Private Limited (UEPL) and existing shareholders of UEPL (Ashoka Buildcon Ltd. and an investment fund managed by Morgan Stanley India Infrastructure) for the acquisition of 100 percent stake in UEPL,” MGL mentioned in an change submitting.
This acquisition will allow MGL to broaden to newer geographical areas in Maharashtra together with Ratnagiri, Latur and Osmanabad, and in Karnataka reminiscent of Chitradurga & Davanagere, thereby offering new avenues for long-term progress of the pure fuel distribution firm. It can even assist lengthen the footprint of MGL by way of scaling up its future enterprise improvement actions throughout a bigger community and buyer base, the corporate mentioned in a submitting.
With this acquisition, MGL has made its first inorganic foray, highlighted Citi. The transaction shouldn’t be low-cost however is strategically optimistic and will enhance the expansion outlook of the pure fuel distribution firm, it added.
Meanwhile, UEPL is a subsidiary of Ashoka Buildcon, and has been granted authorisation from Petroleum and Natural Gas Regulatory Board to develop City Gas Distribution enterprise in Ratnagiri, Latur, Osmanabad and Chitradurga & Davanagere. The arm is engaged in supplying pure fuel to home, business, industrial and transport sectors.
Reacting to the acquisition information, shares of the freeway developer had been buying and selling at Rs 78.29, up 2.9 p.c, on the BSE.
What Should Investors Do Now?
CITI retains a ‘buy’ stance on Mahanagar Gas with a goal of Rs 1,030 per share. The fuel distribution firm makes its first inorganic foray by buying 100 per cent stakes in Ashoka Buildcon’s metropolis fuel arm Unison Enviro.
The transaction-MGL’s first acquisition- shouldn’t be low-cost however is strategically optimistic and will enhance the expansion outlook of the pure fuel distribution firm, broking and analysis agency Citi mentioned in a be aware to shoppers
While headline valuation at 6.4 occasions trailing Price to Book seems excessive, Citi views the deal positively. The acquired metropolis fuel distributor remains to be at an early progress stage however this purchase out could possibly be a great use of money by enhancing MGL’s progress outlook, Citi mentioned.
MGL’s robust established presence in Maharashtra might lend it geographical synergies and will additionally change notion across the firm’s perceived lack of progress aggression, it mentioned.
MGL has been supplying Natural Gas by means of Compressed Natural Gas (CNG) to autos and Piped Natural Gas (PNG) to home, business, and industrial customers in Mumbai, Navi Mumbai, Thane, together with adjoining areas and Raigad district.
Disclaimer:Disclaimer: The views and funding suggestions by consultants on this News18.com report are their very own and never these of the web site or its administration. Users are suggested to test with licensed consultants earlier than taking any funding selections.
Read all of the Latest Business News right here
