Recommendations from Power and Refineries Sectors

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.

Mahanagar Gas Limited

CMP - ₹749.80
BSE CODE 539957
Volume 62,104
Face Value ₹10
Target ₹800-820
Stoploss ₹735 (CLS)

Mahanagar Gas Limited (MGL), one of India’s leading natural gas distribution companies, was incorporated on May 8, 1995. GAIL (India) Limited, a Maharatna company of the Government of India, is the promoter of MGL which is the sole authorised distributor of compressed natural gas (CNG) and piped natural gas (PNG) in Mumbai, Thane and Raigad districts of Maharashtra. MGL distributes CNG for motor vehicles and PNG for domestic, commercial as well as industrial use. Analysing the quarterly performance, its net sales for Q4FY22 stood at ₹1,187.60 crore as opposed to ₹784.04 crore in Q4FY21. This reflected an increase of 51.47 per cent. The operating profit was reported on the lower side at ₹238.17 crore in Q4FY22 as compared to ₹333.33 crore in Q4FY21, posting a decrease of 28.55 per cent. The net profit was also dismal and was reported at ₹131.80 crore in Q4FY22, which has reduced by 38.06 per cent as compared to ₹212.77 crore reported in Q4FY21. MGL has a loyal customer base in CNG and commercial establishments, which is less price-sensitive than the industrial customer base and enables the company to maintain higher per unit margins than its peers. Hence, we recommend BUY. 

Torrent Power Limited

CMP - ₹471.25
BSE CODE 532779
Volume 41,395
Face Value ₹10
Target ₹505-522
Stoploss ₹448(CLS)

Torrent Power is one of the leading brands in the Indian power sector, promoted by Torrent Group that is committed to its mission of transforming life by serving two of the most critical needs, namely, healthcare and power. It is an integrated power utility and is one of the largest private sector players in India having interests in power generation, transmission, distribution, and manufacturing as well as supply of power cables. As regards the quarterly performance of the company, it recorded net sales of ₹3,743.65 crore in Q4FY22. This reflected a 21.38 per cent jump from ₹3,084.13 crore in Q4FY21. Operating profit in Q3FY22 stood at ₹1,087.58 crore as compared to ₹946.86 crore in Q3FY21, a rise of 14.86 per cent. The net loss was recorded at ₹487.37 crore in Q4FY22 vis-à-vis net profit at ₹398.10 crore in Q4FY21. Torrent Power has reported a healthy operational performance in Q4FY22, led by higher demand and improved collection efficiencies across its distribution business. Hence, we recommend BUY.

(Closing price as of June 14, 2022)