It’s not even a year since Mahanagar Gas Ltd (MGL) listed on the bourses and investors have already hit the jackpot.

Since listing on 1 July, the MGL stock has more than doubled from its issue price of Rs421 to Rs956.75 on NSE.

MGL has ended financial year 2017 on a sweet note. Lower input costs meant net profit increased about 27% annually to Rs393 crore at a time when net revenue declined 2%. Average daily sales volume increased last year. MGL explains that the marginal decline in revenue was on account of pass-through of the net reduction in input gas costs.

Profitability was strong in the March quarter as well. Revenue (adjusting for excise) increased about 3% to Rs525 crore whereas net profit increased almost 18% to Rs99.5 crore. The March quarter Ebitda of Rs163 crore is broadly in line with Street estimates. Ebitda is earnings before interest, taxes, depreciation and amortization. Last quarter’s Ebitda margin, though lower on a sequential basis, increased compared with the same period last year to 31%.

Volume increased both sequentially as well as on an annual basis, although some analysts believe March quarter sequential volume growth is slightly below expectations. That can be attributed to slower growth in the compressed natural gas (CNG) segment. For the stock, volume growth will matter. Last financial year, volume grew about 6% year-on-year.

The good news is that the volume outlook is upbeat. The growing fleet of cab aggregators is expected to boost CNG demand. Healthy penetration in the Mumbai region is expected to help too. Expansion in Raigad district should also offer some support to volume growth. Additionally, MGL’s ability to sustain margins will be another factor to watch out for. For financial year 2017, the Ebitda margin stood at 31.7%.

But the sharp run-up in the share price suggests that investors are capturing much of the optimism. As analysts from IDFC Securities Ltd point out, the strong growth prospects underpin its target price multiple of 18x FY19E earnings per share. “We believe, however, that current valuations of 20x FY19E earnings per share/12.3x EV/Ebidta more than adequately capture the 9% CAGR in earnings over FY17-19E," added the brokerage firm. EV is short for enterprise value. IDFC Securities’ target price of Rs845 per share translates into an around 11.7% downside from MGL’s current market price.