Shares of Mahanagar Gas plunged 15.7 per cent to Rs 1,318.9 apiece on the BSE in Wednesday’s intraday trade after global brokerage Citi downgraded the stock to ‘Sell’ from ‘Buy’.
According to reports, the brokerage believes city gas distribution companies, such as MGL, stand vulnerable to regulatory changes, wherein the government would want consumers to benefit from sectoral reforms.
“Oil Minister Hardeep Puri has been emphasising that the full benefits of natural gas sector reforms haven’t reached end customers. As the government stays “committed” to ensuring compliance by city gas companies for affordable rates, Mahanagar Gas’ margins are more susceptible to any drastic steps undertaken by the government in the future due to the premium in margins it enjoys,” the brokerage said.
