IGL's volumes are on the mend, back to nearly 80 percent of pre-Covid levels. The long-term growth story remains strong
Indian markets rallied for the fifth day in a row on July 7 and swift price action was seen in stocks like Bajaj Finance, Bosch, Bandhan Bank, IGL and Ujjivan Financial Services.
A rapid recovery in performance once the situation turns normal and expansion into new locations will be positive in the longer run
While the company will operate 55 outlets spread across the national capital territory to cater to limited demand as part of the rationalisation exercise, its piped natural gas supplies will remain unaffected by the lockdown.
The government had in June 2010 given IGL a city gas distribution licence for UP's Ghaziabad district.
Global research firm CLSA is of the view that volumes along with margins were inline and has maintained a buy rating with target at Rs 390 per share.
Keynotes Financial Opiniery is bullish on IGL has recommended buy rating on the stock with a target price of Rs 340 in its research report dated March 19, 2019.
Allocation of new GAs in the 10th round of CGD bidding will be an additional growth driver for the future.
Allocation of complementing geographies stands as a positive for the downstream gas companies and would facilitate higher utilisation of the existing infrastructure, thereby bringing added operating efficiencies in the long term
Given the macro opportunities, we remain positive on the sector's growth story
Nomura believes that Gurugram can boost volume outlook higher and longer.
IGL and MGL are strategically venturing into newer geographies. This would ensure a rapid growth in volumes in the future
Any increase in the prices of natural gas could have a visible impact on associated sector companies.
At present, there are 450 CNG-filling stations in Delhi-NCR and IGL is planning to come up with 50 more CNG pumps across Delhi-NCR by February 2019.
GAIL and IGL reported strong volume and a topline growth during Q1FY19. We find both stocks fundamentally sound and stay convinced with their growth story. While valuations for GAIL are attractive, we would recommend a better entry point for IGL.