Buy Indraprastha Gas; target of Rs 576: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Indraprastha Gas

We increase our FY23/24E earnings higher by ~3% as we lower depreciation charges while we maintain our volumes and margins in a rising gas cost environment. IGL reported superlative results with EBIDTA/PAT of Rs6.2bn (+23%Q/Q; PLe Rs4.5bn) and Rs4.2bn (+16%Q/Q; PLe Rs3.1bn) due to higher margins and volumes. Volumes were higher QoQ partly despite a seasonally weak quarter at 8.0mscmd (+4%Q/Q). In the near term, rising price of domestic gas supplied to City Gas Distribution (CGD) due to blending of high priced spot LNG volumes will be a concern (even though company passed it on to customers). However, RILKGD6’s higher blending with additional deep water supplies of 12mmscmd (to gradually ramp up) from Oct-22 will ease pricing pressure. CGD industry has made representation to the government of rising gas prices and company remains hopeful of near term solution.

Outlook

IGL remains an enviable business model with high volume growth due to geographical expansion and addition of new buses and taxis. Reiterate “BUY” with DCF-based PT of Rs576 (Rs589) as we lower the depreciation amount in line with Q1 trends.

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Indraprastha Gas - 100822 - praBHU