Indraprastha Gas Ltd. share price target

IGL's Q2FY21 revenues declined 23.1% YoY to Rs. 1,441cr with a volume drop of 16.4% YoY to 506 Standard Cubic Meter (SCMmn). This was primarily due to slump in demand of 20.3% for CNG at 255mn kgs (vs. 320mn kgs in Q2FY20) due to transport restrictions. Henceforth, CNG revenues stood at Rs. 944cr down 24.9%. Similarly, demand from industrial and commercial customers were also hit. PNG segment reported sales of Rs. 355cr (-17.1% YoY). Natural Gas and Industrial/ Commercial PNG segment volumes declined 26.1% YoY and 1.4% YoY, respectively, to 34SCMmn and 72SCMmn. This was partially offset by a volume growth of 21.2% YoY in PNG-domestic...

We increase our FY21 earnings estimate by 9.8% to factor in higher margins and make other changes. 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 Covid pandemic to drive CNG volumes. IGL remains a play on rising pollution concerns as ban on...

Gross margins in Q2FY21 were at | 13.6/scm, above our estimates due to lower gas costs. On a QoQ basis, margins were flattish. Lower gas costs have enabled IGL to sustain healthy margins. The company reported strong EBITDA/scm at | 8/scm, up | 1.6/scm YoY and | 4.6/scm QoQ on account of positive operating leverage. Going forward, on account of increase in LNG prices, we expect gross margins to decline from current high levels. During the current quarter, IGL also reduced CNG and PNG prices post reduction in domestic gas prices. Hence, we expect margins at | 13.1/scm and...

IGL: Margin surge leads earnings beat upgrade to BUY. CPBI: Healthy quarter; upside limited cut to ADD. GUJS: Upbeat volume outlook; tariff risks appear priced in. CRS: Decent performance in a tough environment. MUNI: Good performance, outlook improving

IGL reported a beat on EBITDA on the back of lower other expenditure. CNG volumes were in line with est. (-21% YoY). Total volumes were marginally higher (5%) than est., primarily led by domestic volumes. As most of the restrictions of the COVID-19 lockdowns are being relaxed, we believe the company would now be able to recover CNG volumes to preCOVID levels in 3QFY21 (v/s our earlier est. of recovery in 4QFY21). Volumes would further be aided by increasing demand for personal mobility in the festive season and various commercial segments (restaurants and malls) ramping up their operating capacities....

Delhi Transport Corporation plans to induct an additional 1,000 CNG buses (~116 buses would be added by end-Sep20) by the end of this fiscal. Delhi currently has ~6,000 buses totally, and IGL expects ~2,500 CNG buses to be introduced over next 2-3 years (apart from 1,000 mentioned above). Also, IGL expects EBITDA margin growth of 34% per year going ahead (as the company expects gas prices to remain benign in the near term). IGL anticipates 34 court hearings for finalizing the valuation part of Gurugram, and expects the deal to be completed by end-FY21. Gurugram has volumes potential of 22.5mmscmd and is currently operating at 0.4 0.6mmscmd. The company does not plan on reducing planned capex, although it may review capex during the mid-year review. Indraprastha Gas Capex from FY22 onwards could be ~INR12b, and expect another ~INR3b capex over the next two years if Gurugram is awarded.

IGL's volume declined sharply 56.6% YoY to 2.7 mmscmd during the quarter on account of lockdown. CNG sales volume fell 65.6% YoY to 1.6 mmscmd (our estimate: 2.2 mmscmd) due to travel restrictions. PNG volumes also degrew 30.3% YoY to 1.1 mmscmd (our estimate: 1.2 mmscmd). Within PNG segment, domestic PNG segment reported strong growth of 39% YoY while industrial/commercial PNG segment de-grew 40% YoY. CNG & industrial/commercial PNG volumes are expected to remain subdued due to extended lockdown in the near term. We expect volume growth to be witnessed from Q4FY21E onwards. We estimate sales volumes at 5.1...

IGL volume at 2.71 MMSCMD (down 56.6% YoY) with realizations of Rs 25.6 per SCM (down 7.1% YoY) was below our estimates. Volumes in CNG segment took a bigger hit followed by de-growth in...

Indraprastha Gas' (IGL) Q1FY21 EBITDA was a tad below estimates at Rs 0.8bn (77% YoY).