Buy Indraprastha Gas; target Rs 415: Firstcall Research

“Indraprastha Gas (IGL), incorporated in 1998, is engaged in distribution of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in Delhi. 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. IGL has planned to expand its business activities in Delhi and its neighbouring towns like Noida, Greater Noida and Ghaziabad. During the quarter ended the robust growth of revenue increased by 45% to Rs.6631.34 million. Net Sales and PAT of the company are expected to grow at a CAGR of 43% and 22% over 2010 to 2013E respectively. IGL and DTC signed a long term gas supply agreement for a period of 10 years.”

“The company disclosed results for the quarter ended Dec 2011. Net sales for the quarter increased by 45% to Rs.6631.34 million as compared to Rs.4570.93 million during the corresponding quarter last year. During the quarter, the company has reported Net Profit increased to Rs.691.50 million from Rs.671.91 million in previous year same quarter. The Basic EPS of the company stood at Rs.4.94 for the quarter ended Dec 2011. Expenditure for the quarter stood at Rs.5126.94mn, which is around 56% higher than the corresponding period of the previous year. Consumption of Raw Material cost of the company for the quarter accounts for 64% of the sales of the company and stood at Rs.4232.66mn from Rs.2598.70mn of the corresponding period of the previous year. Other Expenditure cost increased 36%YoY to Rs.790.55mn from Rs.581.34mn and accounts for 12% of the revenue of the company for the quarter.”

“At the current market price of Rs.360.00, the stock is trading at 16.13 x FY12E and 12.93 x FY13E respectively. Price to Book Value of the stock is expected to be at 3.83 x and 2.95 x respectively for FY12E and FY13E. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.22.32 and Rs.27.84 respectively. During the quarter ended the robust growth of revenue increased by 45% to Rs.6631.34 million. Net Sales and PAT of the company are expected to grow at a CAGR of 43% and 22% over 2010 to 2013E respectively. IGL and DTC signed a long term gas supply agreement for a period of 10 years. On the basis of EV/EBITDA, the stock trades at 7.69 x for FY12E and 6.21 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 415 for Medium to Long term investment,” says Firstcall Research report.

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