ICICI Direct has given Hold recommendation for Indraprastha Gas with a target price of Rs. 595 in its research report issued on Feb 12, 2021
ICICI Direct’s research report on Indraprastha Gas
Indraprastha Gas (IGL) reported its Q3FY21 numbers that were above our estimates on the operating front. Volumes fell 6.5% YoY to 6.3 mmscmd (our estimate: 6.4 mmscmd). Volumes increased 13.8% QoQ as CNG and industrial PNG demand is recovering post relaxations in lockdown. Revenues fell 13.1% YoY to Rs 1446.2 crore (our estimate: Rs 1476.2 crore). Gross margins increased Rs 2.8/scm YoY owing to low gas costs. EBITDA increased 27.8% YoY to Rs 500.7 crore (our estimates: Rs 465 crore). Subsequently, PAT came in at Rs 334.9 crore, up 18% YoY (our estimate: Rs 330.1 crore) as the company reported lower other income.
Outlook
We roll over valuations to FY23E and value standalone IGL at Rs 550/share (22x FY23E EPS) and investment in Central UP Gas (CUGL) and Maharashtra Natural Gas (MNGL) at Rs 45/share to arrive at a target price of Rs 595 (earlier Rs 490/share).