Shell sheds entire 10% stake in Mahanagar Gas; stock rallies

Shares of Mahanagar Gas rallied 12 per cent in early trade on Tuesday on the NSE after BG Asia Pacific Holdings (BGAPH), a wholly-owned subsidiary of Shell, exited the company.

BG Asia Pacific Holdings is part of the promoter group. GAIL (India) has 3.21 crore shares, or 30.77 per cent, stake in Mahanagar Gas. In 2016, Shell took over BG Group Plc, and subsequently acquired its assets worldwide.

According to block deal data on the NSE, BG Asia sold its entire 98.77 lakh shares, representing 10 per cent of the total paid-up equity capital of the company, at an average price of ₹780 a share for a consideration of ₹770 crore.

The buyers include HDFC Mutual Fund, which bought 5.78 lakh shares, Goldman Sachs India 6.73 lakh shares, SBI Life Insurance 6.20 lakh shares and Societe Generale 12.82 lakh shares.

At the end of June 2019, L&T Mutual Fund was holding 2.32 per cent stake in the company, while 184 foreign portfolio investors owned 24.36 per cent stake. The FPIs include Schroder International Selection Fund Emerging Asia (4.49 per cent), Lazard Emerging Markets Small Cap Equity Trust (1.16 per cent) and Eastspring Investments India Equity Open (1.1 per cent).

Besides, insurance major SBI Life Insurance (3.55 per cent) and Bajaj Allianz Life Insurance (1.01 per cent) also had exposure in the company. Following Tuesday’s buy, SBI Life Insurance’s stake in the company further increased.

Shell’s earlier move

In April this year, Shell had reduced its shareholding in Mahanagar Gas to 24 per cent from 32.5 per cent. “This is part of Shell’s ongoing portfolio optimisation (program) to transform Shell into a simpler company, delivering stronger returns,” Shell had said in its media statement.

Analysts are bullish on the stock as it reported better-than-expected first quarter performance for the current fiscal.

Centrum Broking said Mahanagar Gas’ Q1 earnings beat estimates on higher margins with reported EBITDA/PAT of ₹280/170 crore growing 31.2/32.6 per cent y-o-y. However, the company’s volume growth of about 3.3 per cent y-o-y was the lowest seen in two years, Centrum, which recommended investors to ‘add’ the stock with a price target of ₹870, said.