Sell Indraprastha Gas; target of Rs 150: Prabhudas Lilladher

Prabhudas Lilladher's research report on Indraprastha Gas

Indraprastha Gas (IGL) reported a revenue of Rs39.5bn, however there was provision reversal of Rs1.14bn with regard to trade margin agreements with the OMCs. Accordingly, adj rev came in at Rs38.4bn, up 2.1% QoQ (PLe: Rs38.3bn, BBGe:Rs38.6bn). While reported EBITDA came in at Rs5bn, adj EBITDA stood at Rs3.8bn (up 5.4% QoQ, PLe:Rs3.9bn, BBGe: Rs4.2bn). Reported PAT came in at Rs3.5bn while adj PAT stood at Rs2.4bn (down 17.7% QoQ, PLe:Rs2.5bn, BBGe:Rs3.3bn).While adj EBITDA/scm was in line with expectations at Rs4.6, volume came in below estimates at 9.2mmscmd(below the exit guidance of 9.5mmscmd).

Outlook

While the company has guided for 10% YoY volume growth we build in a conservative volume growth CAGR of 7% over FY25-27E with an EBITDA/scm of Rs6 for FY26/27E. We re-rate the stock from ‘Reduce’ to ‘Sell’ on the stock with a TP of Rs 150 based on 12x FY27 adj EPS.