Mahanagar Gas (MGL) is the third largest city gas distribution (CGD) company in India with a history of more than 20 years of natural gas distribution in Mumbai and adjoining areas. MGL is promoted by GAIL and British Gas. Angel Broking has recommended 'Subscribe' to IPO of Mahanagar Gas.

As of FY2016-end, MGL served 0.47mn vehicles through its 4,646km of pipeline and 188 compressed natural gas (CNG) filling stations. It supplies piped natural gas (PNG) to 0.86mn domestic households, 2,800 commercial consumers and 60 industrial consumers.

Commenting on the investment rationale, the stock broker said, ''On considering almost similar growth potential as that of the industry peer Indraprastha Gas (IGL), 22%+ RoE levels as reported in the last 6 years, debt free status, yearly cash flow generating potential of Rs 2 billion+, strong dividend payout ratio (Management has guided for 35% dividend payout; translates to ~4% dividend yield), the issue at 12.9x PE FY2016 (vs peers trading at over 18.0x) is attractively priced. We recommend SUBSCIRBE to Mahanagar Gas IPO.''

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