Mahanagar Gas shares hit 52-week high on acquisition of Unison Enviro

Shares of Mahanagar Gas, one of the largest city gas distribution companies in India, rallied over 8% to hit a 52-week high in intraday trade on acquisition of Unison Enviro, a subsidiary of highway developer Ashoka Buildcon. The Mumbai-based company has signed a share purchase agreement (SPA) to acquire 100% stake in Unison Enviro Private Limited (UEPL) for ₹531 crore.

“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% stake in UEPL,” Mahanagar Gas (MGL) said in an Exchange filing on March 3.

UEPL has been granted authorisation from Petroleum and Natural Gas Regulatory Board (PNGRB) to develop city gas distribution business in districts of Ratnagiri, Latur, Osmanabad and Chitradurga & Davanagere. It is engaged in supplying natural gas to the domestic, commercial, industrial, and transport sector.

The deal, which is subject to regulatory approval, will enable MGL to expand to newer geographical areas in Maharashtra (Ratnagiri, Latur & Osmanabad) and Karnataka (Chitradurga & Davanagere), thereby providing new avenues for long term growth.

“The transaction is of strategic importance to MGL and the extended footprint would help the company to scale its future business development activities across a larger network and customer base,” it added.

HDFC Bank Investment Banking was exclusive Transaction Advisor to MGL. Kotak Investment Banking was exclusive Financial Advisor to Ashoka Buildcon and the investment fund managed by Morgan Stanley India Infrastructure on this transaction.

Ashu Shinghal, Managing Director of MGL, said, “There is great potential of integrating resources and derive synergies from this acquisition. MGL, with its deep-domain knowledge, strategies for long-term growth and capable workforce, is well equipped to seize the opportunities that lie ahead of it.”

“MGL is strategically poised to leverage new opportunities in the CGD sector, as it continues to expand its areas of operations while providing high quality services to its customers. The acquisition would help MGL expand its network within and beyond Maharashtra and offer its quality services with safety to a broader customer base, thereby contributing towards long term growth of the organisation,” Shinghal added.

The shares of Mahanagar Gas rose as much as 8.5% to hit a 52-week high of ₹983.60 intraday after opening higher at ₹926 against the previous closing price of ₹906.60 on the BSE. The stock breached its previous high of ₹931.45 touched on February 16, 2023. It hit a 52-week low of ₹666.35 on June 20, 2022.

At 1:15 pm, Mahanagar Gas shares were quoting at ₹971.20, up 7.13%, while the market capitalisation stood at ₹9,593.30 crore. There was a surge in volume as 1.58 lakh shares changed hands over the counter as compared to the two-week average volume of 0.11 lakh stocks.

The shares of Mahanagar Gas have delivered a return of 36% in the last one year, while it added over 12% in six-month period. On the year-to-date (YTD) basis, the counter has risen 15%, while it rose 10% in a month. In the last one week, the mid-size energy company has gained nearly 11%.

For the December quarter of the current fiscal (Q3 FY23), Mahanagar Gas posted 203% growth in its net profit at ₹172.07 crore as compared to ₹56.79 crore in Q3 FY22. The net sales jumped 63.72% to ₹1,838.44 crore from ₹1,122.89 crore in the quarter ended December 2021. EBITDA grew 148.40% YoY to ₹256.1 crore in Q3 FY23 against ₹103.1 crore in Q3 FY22. The board of the company also declared an interim dividend of ₹10 per share for the financial year 2022-2023.