IGL stock up 6% on UBS upgrade; MGL hits 52-week high with target boost

Shares of Indraprastha Gas Limited (IGL) and Mahanagar Gas Ltd (MGL) have recently experienced significant gains due to positive updates from UBS. Investors looking to invest in stocks might find these developments particularly noteworthy.

IGL stock rises 6% on UBS upgrade

Indraprastha Gas Limited's stock price climbed by over 6% after UBS upgraded its rating from 'sell' to 'buy,' significantly raising the target price from ₹400 to ₹700 per share. The brokerage firm praised IGL’s robust short-term performance and highlighted its promising growth prospects.

UBS anticipates a notable improvement in IGL's volume growth, projecting an increase from a 4% year-on-year rise in FY24 to an impressive 8.2% compound annual growth rate (CAGR) from FY24 to FY27. This anticipated growth is attributed to ongoing infrastructure expansion and the company’s push into new markets. Additionally, UBS hinted that potential mergers and acquisitions, yet to be included in the stock's current price, could further boost its value.

MGL hits 52-week high after target price increase

Meanwhile, Mahanagar Gas Ltd (MGL) also saw a substantial rise in its stock price, reaching a 52-week high with a 6% increase. UBS maintained a 'buy' rating on MGL but raised the target price from ₹1,600 to ₹2,400 per share. This upgrade reflects the brokerage’s positive outlook on MGL’s growth.

UBS expects both organic and inorganic volume growth to exceed previous estimates. The firm has increased its volume forecasts for FY25-27 by 7-11%, driven by ongoing infrastructure developments and the expansion of the CNG fleet. Additionally, UBS has raised its EBITDA per scm forecast for the same period by 6-11%, now predicting it to reach ₹12.1-12.3/scm. This adjustment accounts for MGL's strategic pricing. Similar to IGL, potential mergers and acquisitions have not yet been factored into the current price projections.

Current stock performance and year-to-date gains

As of 10:37 am, IGL’s stock was trading 5.4% higher at ₹558.90 on the NSE, while MGL was up 6.3% at ₹1,936.65. Both stocks have delivered impressive returns so far this year, with IGL and MGL rallying 33% and 60%, respectively. These gains far surpass the Nifty's 16% return.

In the past 12 months, IGL's stock has appreciated by 19%, while MGL has surged by an impressive 83%. In comparison, the Nifty has risen by 28% over the same period.

Key takeaways

• Stock upgrades: UBS’s positive rating revisions have significantly impacted IGL and MGL, driving their stock prices up.
• Growth projections: Both companies are expected to experience considerable growth, driven by infrastructure expansion and new market entries.
• Performance outperformance: Both IGL and MGL have notably outperformed the Nifty index, reflecting strong investor confidence.