Moneycontrol PRO
UPCOMING EVENT:Special webinar on Highlights of global investing in 2021 and what lies ahead' at 2 pm on 21st January, 2022. Register Now!

Neutral Indraprastha Gas; target of Rs 520: Motilal Oswal

Motilal Oswal recommended Neutral rating on Indraprastha Gas with a target price of Rs 520 in its research report dated November 09, 2021.

November 10, 2021 / 06:27 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Motilal Oswal's research report on Indraprastha Gas


Indraprastha Gas (IGL) reported EBITDA ahead of our estimates. This was led by better-than-estimated volumes (CNG volumes now 8% above pre-COVID peak) and higher-than-estimated EBITDA/scm (INR8, primarily supported by a CNG price hike of INR1.8/kg during the quarter). With an overwhelming quarterly performance, the challenges ahead for IGL are overwhelming as well: 1. The recent excise duty cut on petrol and diesel has reduced savings of CNG to liquid fuels. As highlighted in our report, Warming up to the winter ahead… Oil price rally may strengthen, although temporarily, we maintain our stance on the normalization of Brent prices by end-FY22. Falling Brent prices would lower savings, thereby impacting volume growth.



Outlook


We revise up our FY22E EPS by 29% on the back of the outperformance in 2QFY22 and factoring the complete pass-through of increase in APM gas price by the company for 2HFY22. The stock trades at around 27x/23x FY23E SA/consol. EPS. We value the stock at 24x Dec’23E EPS to arrive at Target Price of INR520. We maintain Neutral on the stock. The sustainability of Brent price at current levels presents an upside risk to our call with regard to both margins and volumes.


For all recommendations report, click here

Close

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Nov 10, 2021 06:27 pm

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark