Indraprastha Gas - Q3FY13 Result Update - Kotak

IGL has posted lower than expected result mainly on account of 1). Higher raw material cost, 2) Higher operating cost and 3). Flat volume & realization growth.

- In Feb'13, IGL has hiked the domestic PNG prices for households in the National Capital Territory (NCT) of Delhi, Noida, Greater Noida and Ghaziabad. For households in Delhi, the new consumer price is being revised to Rs 23.50/SCM for consumption up to 30 SCM in two months and to Rs 35.50/scm beyond consumption of 30 SCM in two months. We believe the full benefit of the same will be reflected in FY14.

- We expect FY13E EPS of Rs. 26.2 and Rs.30.3 for FY14E. The management believes that the strong trends in CNG and PNG segment will continue and IGL is best placed to benefit from rising gas consumption in India.

- Based on our estimates, the stock at current market price of Rs.257 is trading at 4.4x EV/EBIDTA and 8.5x P/E on FY14E earnings.

- Based on our DCF valuation model, the fair value of IGL is Rs. 273 and we maintain our Accumulate rating.

Source : Equity Bulls

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