Mahangar Gas has received a good response for its Initial Public Offering, with the shares being oversubscribed by more than 6 times.

The issue was oversubscribed on the first day itself, as investors see a lot of potential for the stock. Moreover, the price was not too expensive.

The IPO received bids for total bids for 10,57,23,000 shares, which were 6.10 times the total issue size of 1,73,46,150 shares, data available with stock exchanges BSE and NSE suggested.

Most of the brokerages say that it is a good opportunity to buy the shares at the IPO price.

Brokerage firm Edelweiss had this to say about the IPO:

"MGL has high exposure to domestic city gas (85 per cent). Its Ebitda margin has declined in the recent past until FY15 in line with that of IGL. We expect margins to expand going forward given improved feedstock allocation and pricing. Furthermore, the company enjoys a strong financial profile - highest margin in the industry, high RoE (over 20 per cent), stable positive cash flows and virtually debt free."

Choice Broking, IIFL and Centrum Broking have all had positive comments on the IPO.

Angel Broking said in a note said that Mahanagar Gas' RoE levels in excess of 22 per cent in last six years, debt-free status, yearly cash flow generating potential of Rs 200 crore and strong dividend payout ratio make the issue price attractive at 12.9 times FY2016 PE.

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