Buy Indraprastha Gas; target of Rs 455: Sharekhan

Sharekhan's research report on Indraprastha Gas

Q3FY23 PAT of Rs. 392 crore (down 27% q-o-q) was 16% below our estimate mainly due to weaker than expected EBITDA margins, while volumes were marginally above expectations. EBITDA margins of Rs. 7.2/scm (down 16% q-o-q) was 16% below our estimate mainly due to the lower allocation of APM gas and higher employee expenses. Gas sales volume was up 2.2% q-o-q to 8.5 mmscmd. IGL guided for gas sales volume exit rate of 10 mmscmd for FY25.

Outlook

We maintain hold on IGL with a revised PT of Rs. 455 as concern of EVs would impact volume growth and act as a key overhang on the stock. At CMP, the stock trades at 16.6x FY26E EPS.