Buy Indraprastha Gas; target of Rs 414: Firstcall Research

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Buy Indraprastha Gas; target of Rs 414: Firstcall Research

Firstcall Research is bullish on Indraprastha Gas and has recommended buy rating on the stock with a target of Rs 414 in its January 3, 2012 research report.

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Firstcall Research is bullish on Indraprastha Gas and has recommended buy rating on the stock with a target of Rs 414 in its January 3, 2012 research report.

"Indraprastha Gas (IGL), incorporated in 1998, is engaged in distribution of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in Delhi. In 1999 the company took over Delhi City Gas Distribution Project from GAIL (India). IGL laid the network for the distribution of natural gas in the National Capital of Delhi to consumers in the domestic, transport, and commercial sectors. The company started with 9 CNG stations and 1000 PNG consumers. Today, the company has crossed 163 CNG stations and 1,22,000 domestic and 300 commercial PNG customers. The company has entered into a joint venture with Siti Energy to set up City Gas Distribution Projects at Sonepat and Panipat located at Haryana. Indraprastha Gas was awarded Golden Peacock Eco Innovation Award."

"Indraprastha Gas Ltd disclosed results for the quarter ended Sep 2011. Net sales for the quarter increased by 34% to Rs.5974.97 million as compared to Rs.4467.91 million during the corresponding quarter last year. During the quarter, the company has reported Net Profit increased to Rs.772.24 million from Rs.662.79 million in previous year same quarter. The Basic EPS of the company stood at Rs.5.52 for the quarter ended Sep 2011. Net profit of the company has increased at 21% yoy Rs.2597.67mn from Rs.2154.96mn of same period of last year. Total revenue for the year stood at Rs.17504.63 mn from Rs.10838.37 which is 62% increased than that of a year ago. EPS for the year stood at Rs.18.55 per equity share of Rs.10.00 each. Operating profit of the company stood at Rs.5017.40mn. OPM for the year stood at 28.66%. Expenditure of the company increased 80% YoY to Rs.12518.08 mn. Interest expenses for the year stood at Rs.131.63mn."

"At the current market price of Rs.366.00, the stock is trading at 15.62 x FY12E and 12.25 x FY13E respectively. Price to Book Value of the stock is expected to be at 3.85 x and 2.93 x respectively for FY12E and FY13E. Earning per share (EPS) of the company for the earnings for FY12E and FY13E   is seen at Rs.23.44 and Rs.29.87 respectively. Recently, the Company has signed long term supply agreement with Delhi Transport Corporation, which contributes approximately 25% of CNG Sales. Net Sales and PAT of the company are expected to grow at a CAGR of 41% and 25% over 2010 to 2013E respectively. During the quarter, the company has reported Net Profit increased to Rs.772.24 million from Rs.662.79 million in previous year same quarter. On the basis of EV/EBITDA, the stock trades at 7.68 x for FY12E and 6.14 x for FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 414 for medium to long term investment," says Firstcall Research report. 

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To read the full report click on the attachment