Indraprastha Gas Ltd. share price target

Lockdowns hit volume growth: Indraprastha Gas' (IGL's) Q1FY21 volumes were hit by pandemic related lockdowns and were at 247mscm (-57% YoY). For Q1FY21, CNG and PNG volumes were at 105m kgs (-66% YoY) and...

IGL's volumes declined marginally YoY to 6.2 mmscmd during the quarter on account of CNG volume de-growth. CNG sales volume fell 2.5% YoY to 4.5 mmscmd (our estimate: 4.3 mmscmd) due to travel restrictions imposed in the last week of March. On the PNG front, volumes increased 4.9% YoY to 1.7 mmscmd in line with our estimates. Domestic PNG segment reported 17% YoY growth while industrial/commercial PNG segment grew 9% YoY. CNG & industrial/commercial PNG volumes in H1FY21E are likely to stay subdued due to extended lockdown in April & May. We estimate volume...

18 June 2020 Volumes were lower 1% YoY at 6.2mmscmd. CNG volumes were down 3% YoY to 4.49mmscmd while PNG volumes were up 5% YoY to 1.74mmscmd (primarily led by higher cooking gas usage). EBITDA/scm was also lower than est. INR7); thus, reported EBITDA came in at INR3.8b (v/s est. Lower other income resulted in PBT of INR3.4b (+3% YoY). Tax rate for the quarter stood at 25.4%, clocking PAT of INR2.

Indraprastha Gas' (IGL) Q4FY20 EBITDA was in line at Rs 3.8bn (+13.7% YoY).

in CNG volumes. Recent CNG price hike and low gas prices to support margin. We tweak our FY21/22 earnings estimate to factor in lower volumes as well as higher margins; (IGL's five year EBIDTA CAGR at ~18% with margins growing at 5% and volumes at 12% CAGR). 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 will subsequently drive CNG volumes. IGL remains a play on rising pollution concerns as ban on competing industrial fuel is a major positive....

Crude prices witnessed a sharp decline in March due to spread of Covid-19 across the globe and Opec deal failure. A likely increase in oil output by both Saudi Arabia and Russia from Q1FY21E and lower demand are expected to lead to a sizeable oversupply in the oil market. Subsequent low oil prices are expected to significantly affect ONGC's profitability....

Current price correction provides good entry point given high entry barriers to lucrative markets of Delhi and Mumbai. CGD companies have seen sharp price correction post release of draft policy on open access. While threat of new entrant remains, important clarification on transportation/ compression tariffs to be paid to incumbents is likely to determine the extent of competition going forward. Also, even if the regulations are to move at fast pace, the first volume delivery from new players looks unlikely before FY22 and meaningful impact can be felt by FY25...

We like IGL given (1) Strong volume growth of ~11% CAGR over FY20-22E, (2) Portfolio of mature, semi-mature and new GAs and (3) Pricing power as evident in 3.9% CAGR growth in per unit EBITDA over FY17-9MFY20 to Rs 6.4. Superior operational metrics (~80% CNG+D-PNG volume), strong earnings growth and healthy return ratios compel to value IGL at 25x Dec-21E EPS vs 19/20x for MGL/GGL. We maintain BUY on IGL following a performance in-line with our PAT estimates in 3QFY20. Our target price is Rs 545/sh (25x Dec-21E standalone EPS and 23x Dec-21E MNGL and CUGL) versus the consensus TP of Rs 435.

Indraprastha Gas (IGL) reported its Q3FY20 numbers that were marginally above our estimates on account of higher-than-expected volumes as well as margins. Volumes increased 13.4% YoY to 6.7 mmscmd and came in marginally above our estimate of 6.6 mmscmd. Revenues increased 10.3% YoY to | 1664.2 crore, in line with our estimate of | 1674.5 crore. EBITDA increased 23.3% YoY to | 391.8 crore (our estimates: | 376.7 crore) on lower than estimated gas costs. Subsequently, PAT came in at | 283.9 crore (up...

Indraprastha Gas' (IGL) Q3FY20 EBITDA was in line at Rs 3.9bn (+23% YoY, Rs 6.4/scm).