Indraprastha Gas Ltd. share price target

Our earlier report, India's gas sector to benefit from syzygy ahead', highlighted how CNG/LNG Retail sales have been declining by 3%/11% CAGR for China Gas Holdings/ENN Energy for the past five years. On the contrary, the Industrial segment continued to grow for these companies at 19-20% CAGR for the past few years. Due to high Real Estate prices, we don't expect the Industrial segment to grow in Delhi. Other areas...

Indraprastha Gas (IGL) reported EBITDA ahead of our estimates. This was led by better-than-estimated volumes (CNG volumes now 8% above pre-COVID peak) and higher-than-estimated EBITDA/scm (INR8, primarily supported by a CNG price hike of INR1.8/kg during the quarter)....

Rs3.7bn) respectively. Volumes recovered as lockdown restrictions eased to Fuel economics and rising private vehicle ownership to increase CNG volumes. EBIDTA/PAT of Rs5.3bn (+39%Q/Q; 2yr CAGR 16%; PLe Rs5.5bn) and 666mscm (+38%Q/Q; 2yr CAGR 5%). We believe receding pandemic concerns...

Easing of COVID restrictions, strong financial position, improved capacity utilization, cost improvement initiatives should support performance in future. We reiterate our BUY rating on the stock with a revised price target of Rs. 624 based on SOTP methodology....

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Pandemic restrictions impact volumes: Indraprastha Gas' (IGL's) Q1FY22 volumes declined due to pandemic restriction and were at 484mscm (-21% QoQ; PLe 550). QoQ comparison is not strictly comparable, given seasonality and volumes were down 15% compared to June 2019 quarter. For Q1FY22, CNG and PNG volumes were at 233m kgs (-24% QoQ) and 152mscm (14%QoQ), respectively. However, easing of restrictions and rising vaccination...

IGL underperformed the broader index by 20% over last one year, as restricted vehicular movement during pandemic hit FY21 CNG volumes by 22.5%YoY (CNG accounts for ~70% of IGL's overall FY21 volumes). However, we expect CNG sales to rise going ahead given 1) receding pandemic concerns, 2) expanding vaccination coverage, 3) continued preference for personal mobility, 4) favorable fuel economics (CNG ~70% cheaper to petrol)...

IGL reported a mixed bag result, with lower than our estimate EBITDA/scm (at INR8) and higher than our estimate volumes (at 6.8mmscmd) translating to in line EBITDA at INR4.9b (+31% YoY). CNG volumes rose 8% YoY, although down v/s pre-COVID levels of 4.92mmscmd (in 2Q-3QFY20). EBITDA/scm was lower than our estimate due to higher opex, despite the...

We lower our FY22-23e earnings estimate by 8.7%/5.6% to factor in lower volume assumption even as we increase our margins. FY21 was a difficult year for IGL as pandemic restrictions on vehicle movement hit CNG volumes. However, easing of restrictions along with rising vaccination coverage will limit incidence of lockdown, going ahead. IGL remains an enviable business model with high volume growth due to geographical expansion and addition of new buses and taxis. Also, shift to private vehicle ownership post...

Improved capacity utilization, easing of COVID restrictions and institutions reopening will support the company's operational and financial performance in the near future. Hence, we reiterate BUY rating...