Emkay Global Financial's research report on Indraprastha Gas
IGL’s Q3FY23 standalone EBITDA/PAT of Rs4.29/2.78bn (down 9%/10% YoY and 19%/33% QoQ) sizably traversed our estimates, led by a 21% beat in gross margins on lower-than-expected gas costs. Other Income was also higher than estimated. Gas sales volume rose 6% YoY (flat QoQ) to 8.12mmscmd (5% miss), with volumes for CNG up 8% YoY (5% miss) and for PNG up 1% (4% miss). Domestic PNG rose 13%, I/C PNG was down 4% and Trading was flat YoY. In ‘kg’ terms, CNG vol. was up 13% YoY. Gross margin fell 11% QoQ to Rs11.3/scm, with net realization up 4% and unit gas cost rising by 9%. Unit opex was in-line, at Rs5.6/scm. Hence, EBITDA/scm was down 14% YoY/19% QoQ, at Rs5.7, much above our ~Rs4/scm estimate. LNG prices fell QoQ.
Outlook
We cut FY23E EPS by 4%, lowering margins but raising FY24E/25E EPS by 4%/6%, due to lower depreciation/higher Other Income. We roll over to Mar-25E with revised TP at Rs485 (8% up); retain BUY. Cabinet decision on the Parikh panel recos is the key trigger.
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