Buy Indraprastha Gas: Target Of Rs 517: Sharekhan
Sharekhan is bullish on Indraprastha Gas recommended buy rating on the stock with a target price of Rs 517 in its research report dated November 11, 2020.
Nov 13, 2020 / 12:31 PM IST
Sharekhan's research repor on Indraprastha Gas
Q2FY2021 results were significantly above our and street estimates with 20% beat in gas sales volume at 5.5 mmscmd (up 2x q-o-q) and 14.2% higher-than-expected EBITDA margin at Rs. 8/scm (up 24% y-o-y). Resultantly, PAT at Rs. 308 crore (down 19.2% y-o-y) was significantly above our estimate of Rs. 193 crore. Sharp recovery in CNG volume to 80% of pre-COVID-19 level to 3.9mmscm, while domestic PNG volume grew by 21% y-o-y to 0.43mmscmd and industrial/commercial PNG recovered to pre-COVID-19 level at 0.78mmscmd. Better-than-expected volume recovery to aid earnings revival over FY2021E-FY2023E; long-term volume growth outlook remains intact, led by regulatory push and expansion of new GAs. Margin to remain robust given weak domestic gas price.
We recommend Buy on Indraprastha Gas Limited (IGL) with a PT of Rs. 517. At the CMP, the stock is trading at 25.2x its FY2022E EPS and 23.6x its FY2023E EPS.
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