Moneycontrol

Budget 2021

Associate Partners:

  • SMC
  • Samsung
  • Volvo

Moneycontrol

Budget 2021

Associate Partners:

  • SMCSamsungVolvo
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Buy Indraprastha Gas: target of Rs 585: Sharekhan

Sharekhan is bullish on Indraprastha Gas has recommended buy rating on the stock with a target price of Rs 585 in its research report dated January 01, 2021.

January 14, 2021 / 08:51 PM IST
 
 
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Sharekhan's research report on Indraprastha Gas


Volumes bouncing back to 97% of pre-COVID levels, high gross margin of Rs13.7/scm (potential increase of 12.2% y-o-y in H2FY21), rupee appreciation and better operating leverage would drive to 27%/23%y-o-y growth in EBITDA/PAT in H2FY21. Long-term volume growth outlook remains intact given regulatory push and ramp-up of volumes in new GAs. The management expects volumes to reach 10 mmscmd over next 5 years, which implies a 12% volume CAGR over FY20-FY24E. We do not see any meaningful volume risk from competition as open-access regulations exclude OMCs as third-party. This removes a major overhang for CGD players, and the focus would shift back to volume and margin growth.


Outlook


We maintain a Buy on IGL with a revised PT of Rs. 585 as volume growth would support strong PAT CAGR of 20% over FY21E-FY23E with a RoE of ~21%. Robust volume growth track-record justifies premium valuation of 24.6x its FY23E EPS.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Jan 6, 2021 12:26 pm

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