Buy Indraprastha Gas; target of Rs 597: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Indraprastha Gas

We tweak our FY21/22 earnings estimate to factor in lower volumes as well as higher margins; (IGL's five year EBIDTA CAGR at ~18% with margins growing at 5% and volumes at 12% CAGR). IGL remains an enviable business model with high volume growth due to geographical expansion and addition of new buses and taxis. Also, shift to private vehicle ownership post Covid pandemic will subsequently drive CNG volumes.

Outlook

IGL remains a play on rising pollution concerns as ban on competing industrial fuel is a major positive. Also, sharp drop in spot LNG prices offer new margin levers for the company. Reiterate "BUY" with a three-year DCF-based PT of Rs597 (Rs601 early) as we increase capex.

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