Buy Indraprastha Gas target of Rs 662: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Indraprastha Gas has recommended buy rating on the stock with a target price of Rs 662 in its research report dated June 25, 2021.

Broker Research

June 28, 2021 / 12:05 PM IST

An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.

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Prabhudas Lilladher's research report on Indraprastha Gas

We lower our FY22-23e earnings estimate by 8.7%/5.6% to factor in lower volume assumption even as we increase our margins. FY21 was a difficult year for IGL as pandemic restrictions on vehicle movement hit CNG volumes. However, easing of restrictions along with rising vaccination coverage will limit incidence of lockdown, going ahead. IGL remains an enviable business model with high volume growth due to geographical expansion and addition of new buses and taxis.

Outlook

Also, shift to private vehicle ownership post pandemic will drive CNG volumes. Reiterate “BUY” with DCF-based PT of Rs662 (unchanged), as we increase our medium term growth assumptions.

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