Buy Indraprastha Gas; target of Rs 450: Emkay Global Financial

Emkay Global Financial is bullish on Indraprastha Gas has recommended buy rating on the stock with a target price of Rs 450 in its research report dated August 10, 2022.

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August 11, 2022 / 15:35 IST

26 Aug, 2025 12:21

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Emkay Global Financial's research report on Indraprastha Gas

IGL’s Q1FY23 standalone EBITDA/APAT of Rs6.18/Rs4.21bn (up 23%/25% qoq; up 62%/72% yoy) came in 15%/12% above our estimates, led by a 10% beat in gross margins on slightly higher-than-expected realizations and lower unit gas cost. Gas sales volumes rose 48% yoy/2% qoq to 7.89mmscmd, in line with estimates. CNG was 2% higher than expectations (up 6% qoq), while PNG was a 6% miss (down 5% qoq). Domestic PNG fell 14% qoq (flat yoy), while I/C declined 4%. Trading was largely flat. Gross margin rose 12% qoq to Rs14.3/scm, with net realization up 29% and unit gas cost rising by 39%. Unit opex was 3% higher than expectations at Rs5.7/scm. Hence, EBITDA/scm was up 20% qoq at Rs8.6 vs. Rs7.5 estimated by us (up 9% yoy).

Outlook

We have cut our FY24E/25E EPS by 2%/4%, as we slightly adjust EBITDA/scm to Rs7.5- 7.6 range. We roll over to Sept’24E and retain our TP at Rs450 with a Buy. Policy support for the CGD sector and resumption of price hikes not affecting demand are key triggers.

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