Emkay Global Financial's report on Indraprastha Gas
IGL’s Q1FY21 standalone EBITDA/PAT fell 77%/85% yoy to Rs834/318mn, missing our estimates by 44%/64%, due to a 9% volume miss and a sharp decline in EBITDA/scm (39% miss) on higher-than-expected opex. Gas sales volume fell 57% yoy/56% qoq to 2.71mmscmd, with CNG/PNG down 66%/30% yoy. Industrial-Commercial PNG volume fell 40% yoy/45% qoq. Third-party trading was down 62% yoy/60% qoq. Domestic PNG however, rose 39% yoy/5% qoq. Gross margin expanded by 7% qoq to Rs13.7/scm (2% miss) but opex/scm jumped 99% yoy/68% qoq to Rs10.4, 22% above our estimate. Hence, EBITDA/scm stood at Rs3.4, down 46%yoy/49% qoq. Net realization/gas cost fell 6%/17% qoq.
We cut FY21E EPS by 4% due to weak Q1 but keep FY22/23E EPS mostly unchanged as some volume cut is offset by high margins. We roll over valuations to Sep’22E and raise our DCF-based TP by 5% to Rs430. We upgrade IGL from Sell to Hold with an EW stance.
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