ICICI Direct's research report on Indraprastha Gas
Indraprastha Gas (IGL) reported its Q1FY21 results that were below our estimates. Revenues fell 59.5% YoY to Rs 638.6 crore, below our estimate of Rs 769.4 crore, due to lower than expected volumes. Volumes were at 2.7 mmscmd (our estimate: Rs 3.4 mmscmd). Gross margins were above estimates and increased Rs 2.1/scm YoY, Rs 1/scm QoQ to Rs 13.5/scm due to lower gas costs. EBITDA was at Rs 83.4 crore, down 76.7% YoY due to lower volumes and negative operating leverage. On the profitability front, PAT was at Rs 31.8 crore, down 85.4% YoY and below our estimate of Rs 105.1 crore.
We believe a full recovery in demand will take time. We maintain HOLD recommendation on the stock and value standalone IGL at Rs 378/share (21x FY22E EPS) and investment in Central UP Gas (CUGL) and Maharashtra Natural Gas (MNGL) at Rs 32/share to arrive at a target price of Rs 410.
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