Sell Indraprastha Gas; target of Rs 300: Prabhudas Lilladher

Prabhudas Lilladher's research report on Indraprastha Gas

Indraprastha Gas (IGL) reported an EBITDA of Rs3.6bn (down 32.1% QoQ, PLe: Rs3.5bn, BBGe: Rs3.6bn) and PAT of Rs2.9bn (PLe: Rs2.1bn, BBGe: Rs2.4bn), down 33.7% QoQ. Decline in earnings sequentially was mainly due to higher sourcing cost post decline in APM allocation While volume came in above estimates at 9.1mmscmd, EBITDA/scm was in line with expectations at Rs4.3, down 32.8% QoQ. The company has guided for an exit volume of 9.5mmscmd forFY25. With the Delhi elections to be held on 5th Feb, a price hike seems unlikely, and concerns prevail on the achievability of Rs7-8/scm EBITDA guidance that the company has stated.

Outlook

We build in a conservative volume growth CAGR of 7% over FY25-27E with an EBITDA/scm of Rs6 for FY26/27E.We maintain ‘Sell’ rating on the stock with a TP of Rs300 based on 12x FY27 adj EPS.