Indraprastha Gas - SELL - TP Rs.291 - Result Update - Kotak

- IGL's result is marginally lower than our estimates. IGL's PAT for Q2FY18 is at Rs.1.69 bn (as against our estimate of Rs.1.75 bn) up 5% qoq and 17% yoy thereby translating into Q2FY18 EPS of Rs.2.4 and CEPS of Rs.3.1 mainly due to higher volumes and higher other income. IGL has 50% stake in CUGL and MNGL each. The combined profit of both the entities for Q2FY18 is Rs. 410 mn. (IGL Share is Rs. 210 mn). During Q2FY18, IGL sold 257 mn kg of CNG thereby registering a growth of 9% yoy and 4% on sequential basis. IGL sold 120 mmscm of PNG in Q2FY18 showing growth of 18% yoy and 11% qoq. The Company has sub-divided face value of Rs.10/- into 5 equity share having a face value of Rs.2/-. We have adjusted the same in our model.

- We expect demand for CNG to increase due to the odd-even scheme that will be brought in Delhi from November 13-17. This decision comes in the wake of rising pollution and breathing problems in Delhi.

- We expect IGL to book CNG gas volume of ~1032 mn Kgs and PNG volume of 477 mmscm in FY18E. We model CNG gas volume of ~1145 mn Kgs and PNG volume of 549 mmscm in FY19E. We expect an EPS of Rs.11.1 & cash EPS of Rs.13.7 for FY18E and an EPS of Rs.12.9 & cash EPS of Rs.15.6 for FY19E. Based on our estimates, the stock at current market price of Rs.310 is trading at 15x EV/EBIDTA and 24.1x P/E on FY19E earnings. We believe that stock is expensively valued at current price and hence we maintain SELL rating on IGL with DCF based revised price target of Rs.291 reflecting better sales volume booked in H1FY18 and potential rise in CNG demand due to re-introduction of odd-even scheme

Shares of INDRAPRASTHA GAS LTD. was last trading in BSE at Rs.303.65 as compared to the previous close of Rs. 314.25. The total number of shares traded during the day was 137723 in over 5390 trades.

The stock hit an intraday high of Rs. 315.1 and intraday low of 302.2. The net turnover during the day was Rs. 42320638.

Source : Equity Bulls

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