Mahanagar Gas shares fall most on record after Citi cites regulatory risks to margin [Video]

Shares of Mahanagar Gas fell as much as 16% on Wednesday after brokerage firm Citi downgraded the stock to “sell” from its earlier rating of “buy.” It also cut its price target on the stock to ₹1,405 from ₹1,480 earlier.

Citi has cited regulatory risk to MGL’s margin and has also opened a negative catalyst watch on the stock.

The brokerage said that it is concerned by the recent statements made by India’s oil minister Hardeep Singh Puri, where he said that end consumers have failed to fully benefit from the government’s gas reforms and that City Gas Distribution companies are continuing to enjoy higher profits.

The minister also said that the government may be willing to consider drastic steps to ensure that the consumers benefit, notwithstanding opposition from the industry.

Citi fears that this could translate into renewed concerns on exclusivity and margins, with MGL’s margin being more susceptible, …