Hold Indraprastha Gas; target of Rs 595: ICICI Direct

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ICICI Direct's research report on Indraprastha Gas

Indraprastha Gas (IGL) reported its Q4FY21 results that were slightly below our estimates. Volumes increased 9.5% YoY, 9% QoQ to 6.8 mmscmd (our estimate: 6.6 mmscmd) as CNG and industrial PNG demand recovered post relaxations in lockdown. Revenues were flat YoY at Rs 1550.6 crore (our estimate: Rs 1538 crore). Gross margins increased Rs 0.9/scm YoY owing to low gas costs. EBITDA increased 30.5% YoY to Rs 491.8 crore (our estimates: Rs 504 crore). Subsequently, PAT came in at Rs 331 crore, up 30.6% YoY (our estimate: Rs 350.1 crore) as the company reported lower other income.

Outlook

We maintain HOLD recommendation on the stock. We value standalone IGL at Rs 549/share (25x FY23E EPS) and investment in Central UP Gas (CUGL) and Maharashtra Natural Gas (MNGL) at Rs 46/share to arrive at an unchanged target price of Rs 595.

For all recommendations report, click here

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