IGL (IGL) vs MGL (MGL): Comprehensive 5-Point Analysis to Determine the Best Long-Term Gas Stock Investment

<ul>
    <li>Leading city gas distributors (CGDs) Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL) declared their January-March quarter results for fiscal 2023-24 (Q4FY24) this month.</li>
    <li>Both companies have received bullish-to-neutral ratings from domestic brokerage firms.</li>
    <li>Earlier this year, the CGDs announced a reduction in their respective compressed natural gas (CNG) prices across all locations.</li>
</ul>
<p><strong>Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL) have announced their Q4FY24 results, showcasing mixed performance amidst price reductions and market fluctuations.</strong></p>
<h2><strong>Price Reductions and Market Impact</strong></h2>
<p>MGL, the city gas operator in Mumbai and its adjoining areas, announced a ₹2.5 per kg reduction in the CNG price on March 6. Accordingly, the revised CNG price will be ₹73.50 per kg. The reductions followed a softening in input gas prices.</p>
<h3><strong>Consumer Benefits and Competitive Pricing</strong></h3>
<p>MGL's CNG price now offers attractive savings of 53 per cent compared to petrol and 22 per cent compared to diesel at current price levels in Mumbai while delivering unmatched convenience, safety, reliability and environmental friendliness to consumers," the CGD said in a statement on March 5.</p>
<h2><strong>Stock Price Trend</strong></h2>
<p>IGL has underperformed the domestic benchmarks Nifty 50 and Sensex this year. In the last six months, IGL has provided 16.65 per cent returns on investments, however, in the last one year, the returns are negative to the tune of 5.07 per cent, compared to Nifty 50's 25.41 per cent and Sensex's 21.71 per cent returns.</p>
<p>On Thursday, shares of IGL settled 2.92 per cent higher at ₹454.20, against a 52-week high of ₹501.35 apiece on the BSE. Shares of MGL settled 0.54 per cent higher at ₹37.39, against a 52-week high mark of ₹52.35 apiece on the BSE.</p>
<p>On the other hand, MGL has performed better than the benchmarks in the last one-to-three year time period. In the last one-to-three months, the gas stock has provided negative returns to the tune of 6.58 per cent and 15.7 per cent. However, in the last one year, MGL has given 25.68 per cent returns, compared to Nifty 50 and Sensex.</p>
<h2><strong>Q4 Results</strong></h2>
<p>IGL reported a rise of 9 per cent in consolidated net profit at ₹433.79 crore in the March quarter of FY24, compared to ₹397.51 crore in the corresponding period last year. The revenue from operations in the quarter-under-review dropped two per cent to ₹3,964.42 crore, compared to ₹4,056.44 crore in the year-ago period. IGL's board also recommended a final dividend of 250 per cent at Rs.5 per equity share for a face value of ₹2 each for FY24.</p>
<p>MGL reported a decline of 16.5 per cent year-on-year (YoY) in net profit to ₹265 crore in the March quarter, while revenue stood marginally lower by 0.1 per cent at ₹1,567 crore. On the operating level, MGL's earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at ₹394 crore, down 12.2 per cent YoY. Margin for the quarter was 25.1 per cent compared to 26.9 per cent in the year-ago period. MGL's board also declared a final dividend of ₹18.</p>
<h3><strong>Conclusion</strong></h3>
<p>In summary, while both IGL and MGL have shown resilience in their financial performance amidst fluctuating market conditions, their stock performance has varied significantly. Investors should consider the long-term potential and current market positioning of these CGDs before making investment decisions.</p>