Hold Indraprastha Gas; target of Rs 430: ICICI Direct

ICICI Direct's research report on Indraprastha Gas

Indraprastha Gas (IGL) reported its Q2FY21 numbers that were above our estimates on account of higher-than-expected volumes as well as margins. Volumes dipped 16.4% YoY to 5.5 mmscmd (our estimate: 5 mmscmd). Volumes doubled QoQ as CNG and industrial PNG demand recovered sharply post relaxations in lockdown. Revenues fell 22.9% YoY to Rs 1305.4 crore (our estimate: Rs 1182.5 crore). EBITDA increased 3.7% YoY to Rs 407.1 crore owing to low gas costs (our estimates: Rs 310.1 crore). Subsequently, PAT came in at Rs 307.9 crore, down 19.2% YoY (our estimate: Rs 206 crore) as the company had negative tax outgo in the base quarter.

Outlook

We maintain HOLD rating on the stock and value standalone IGL at Rs 400/share (22x FY22E EPS) and investment in Central UP Gas (CUGL) and Maharashtra Natural Gas (MNGL) at Rs 30/share to arrive at a target price of Rs 430.