Dolat Capital is bullish on Indraprastha Gas has recommended buy rating on the stock with a target price of Rs 368 in its research report dated February 06, 2019.
Dolat Capital's research report on Indraprastha Gas
IGL volume at 5.9 MMSCMD with realizations of ` 27.7 per SCM (up 6% QoQ) was ahead of estimates. Gas cost also increased 7.5% sequentially due to higher LNG prices and currency depreciation. Gross spreads were strong at ` 11 per SCM. We believe that gas cost should come down sequentially and hence spreads should expand further. Volume growth outlook looks good and we believe that IGL should be able to maintain low double-digit volume growth trajectory driven by CNG economics and expansion in regions like Rewari and Gurugram. IGL has got full rights of CGD operations in high potential Gurugram region. This enhances our confidence on long term volume outlook.
We continue to like the story considering the business dynamics of IGL. We bring in FY21 estimates and value it on DCF. There can be some short term pressure on the stock price as the run up to the result was nearly 10% in the last few days. We reiterate our Buy recommendation with a target price of ` 368.
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