PSU stocks in green after Axis Capital maintains buy rating for an upside of up to 19%

The shares of two prominent city gas distributors which are in the business of distributing gas across various Northern parts of the country gained over 4 percent in today’s trade after Axis Capital’s bullish stance on these two companies. 

Indraprastha Gas Ltd (IGL)

The shares of Indraprastha Gas Ltd, with a total market capitalization of Rs 27,897.83 Crore on Thursday, reached an intraday high of Rs 201.64 per share gaining around 4.3 percent in today’s trade. 

Axis Capital has upgraded its rating on IGL shares from its previous rating of “Add” to a “Buy” rating now. It has maintained a target price of Rs 224 per shares which implies a potential upside of 16 percent from its previous closing price of Rs 193.3. 

The company specializes in the sale of natural gas and ensures a safe, reliable, and uninterrupted supply through its extensive distribution network. It serves a wide range of consumers, including transport, domestic, commercial, and industrial sectors. The company provides city gas distribution across the National Capital Territory of Delhi and extends its services to nearby regions such as Noida, Greater Noida, Ghaziabad, Hapur, Gurugram, Meerut, and more.

Mahanagar Gas Ltd (MGL)

The shares of Mahanagar Gas Ltd, with a total market capitalization of Rs 13,480.20 Crore on Thursday, reached an intraday high of Rs 1,388.9 per share gaining around 4.2 percent in the trading session. 

Axis Capital has initiated its coverage on MGL shares by giving a “Buy” rating and maintained a target price of Rs 1,580 per shares which implies a potential upside of 19 percent from its previous closing price of Rs 1,332.5. 

The company is engaged in the business of distribution of CNG (Compressed Natural Gas) and PNG (Piped Natural Gas) in districts of Maharashtra. It serves residential, commercial, industrial, and automotive sectors. The company is also focused on supporting the government’s vision of promoting natural gas as a key component of India’s energy mix.

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Brokerage Rationale 

Axis capital said that the CGD (City Gas Distribution) sector will gain from its aggressive expansion and it is set to be more favourable as compared to petrol or diesel vehicles. 

The brokerage firm reflected its preference on companies with higher exposure to CNG due to their potential to see the fastest growth in the value chain. Axis Capital believes that the key players in the market will focus on profit expansion through value engineering instead of hiking prices. 

The brokerage also noted that the new CNG vehicle models are growing the addressable market to around 55 percent of the total PV (Passenger Vehicle) industry volume, and is also backed by supportive government policies to achieve this growth. 

Industry Outlook

India’s City Gas Distribution (CGD) market is projected to nearly double from $11.33 billion in 2025 to $20.93 billion by 2030, reflecting a robust annual growth rate of 13.06 percent. The Government of India aims to boost the share of natural gas in the country’s primary energy mix from the current 6 percent to 15 percent by 2030. To facilitate this growth, the Petroleum and Natural Gas Regulatory Board (PNGRB) has approved 295 CGD projects across 27 states and union territories.

Written By Adhvaitha Nayani

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