Indraprastha Gas - Q1FY14 Results - Kotak

IGL has posted better than expected results mainly on account of 1). Higher realization, 2). Higher sales volume, 3). Lower employee cost and 4). Higher other income. In Q1FY14, the Company has reported a PAT of Rs. 876 Mn up by 3.0% YoY and by 4.8% on sequential basis thereby translating into Q1FY14 EPS of Rs. 6.3 and CEPS of Rs. 10.1.

- The next date of hearing of the case in Supreme Court between PNGRB and IGL is due on 29th Aug'13. The outcome of this judgment will have a significant bearing on the future prospects of the Company. On a conservative basis, we have tweaked our assumptions, accordingly.

- We expect FY14E EPS of Rs. 28.8 and Rs.32.5 for FY15E. The management believes that the strong trend 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.266 is trading at 4.5x EV/EBIDTA and 9.2x P/E on FY14E earnings.

- Based on our DCF valuation model, the fair value of IGL is Rs. 300 and we maintain our Accumulate rating.

Source : Equity Bulls

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