Indraprastha Gas Ltd. share price target

Indraprastha Gas Limited (IGL) is seeing 7?8% yoy growth in CNG/PNG volumes, which seems sustainable on an increase in private vehicle and taxi conversions, strong growth in the domestic PNG segment, and stable industrial PNG. Addition of new buses can accelerate this growth rate to 10%+ while industrial and corporate cab conversions in NCR satellites, and the return of Gurgaon and new areas are potential longer?term triggers. Margins are steady due to weak domestic gas prices. Higher gross margin from disciplined pricing can help offset increase in opex and rupee depreciation. We build 8% volume CAGR in FY16?18 (vs. 7% earlier) and slightly higher EBITDA/scm of Rs 5.3 (vs. Rs 5.2). We raise our FY17/18 EPS by 4%/5% and DCF/SOTP?based target price to Rs 650 (from Rs 630). We remain bullish on the city?gas? distribution sector due to a cyclical volume and margin recovery from lower gas prices and structural triggers. Phillip Capital downgraded IGL to Neutral from Buy due to limited upside. They recommend investors subscribe the Mahanagar Gas IPO (MGL IPO note) considering its attractive valuation.

Trendlyne has 12 reports on IGL updated in the last year from 6 brokers with an average target of Rs 613.7. Brokers have a mixed rating for IGL with 2 downgrades in past 12 months even though there have been 4 price upgrades in the past 6 months.

Indraprastha Gas reported its Q4FY16 results, which were below our estimates on the gross margins front. Revenues declined 3.4% YoY to | 885.6 crore, below our estimate of | 939.4 crore, as an 8.4% YoY...

thereby contributing Rs 1.0/share to IGL's consolidated EPS of Rs 8.7/share in Q4. Under PNG, domestic/industrialcommercial/third party trading volumes rose 15%/3%/16% yoy. IGL cut industrial PNG prices by 2530% following reduction in Qatar term LNG rates...

CNG realizations declined QoQ by INR0.4/scm to INR26.7/scm despite an INR1.4/scm decline in gas costs to INR14.1/scm implying lower pass through of gas costs decline. PNG realizations however declined by INR5/scm to...

IGL reported revenues of Rs 9.3bn (-1.6% YoY), led by lower realisation. The companys gross margins improved as the reduction in CNG/PNG prices was not on a par with the cut in the domestic gas price. However, higher other expenses resulted in EBITDA of Rs 1.9bn (-2% YoY). Consequently, APAT was Rs 1.1bn (-3% YoY).

9 Volume growth was 4.3% to 4.01mmscmd. CNG/PNG sales rose 2.6%/5.1% yoy to 209.3mnkg/86.6mmscm.Salesweredown1.5%qoqduetoseasonality 9 Grossmarginrose6%qoqtoRs9.7/scmasIGLpartiallyheldbackacutinretailprices...

interest in CNG; initial signs point to acceleration in conversion rates for both taxis and privatecarsgoingforward.Otherimportantdriversincludenewbusandautolicensesand opportunitiesinNCRsatellites.WenowbelieveIGL'svolumegrowthwillsee10%CAGRin...

adopt CNG aggressively. Enormous increase of entry tax on diesel Relative performance chart (one year) will not be renewed. NGT has also been consulting with other...

IGL reported revenues of Rs 9.7bn ( 1.9% YoY), led by muted volume growth of 3.3%. Despite the weakening rupee, there were no hikes in CNG/PNG prices, which resulted in EBITDA margins declining to Rs 5.1/scm; EBITDA was Rs 1.9bn (-12%) and APAT stood at Rs 1.0bn (-15% YoY).