Indraprastha Gas - Q1FY21 Result Update - ICICI Securities

Indraprastha Gas (IGL) reported its Q1FY21 results that were below our estimates. Revenues fell 59.5% YoY to Rs. 638.6 crore, below our estimate of Rs. 769.4 crore, due to lower than expected volumes. Volumes were at 2.7 mmscmd (our estimate: Rs. 3.4 mmscmd). Gross margins were above estimates and increased Rs. 2.1/scm YoY, Rs. 1/scm QoQ to Rs. 13.5/scm due to lower gas costs. EBITDA was at Rs. 83.4 crore, down 76.7% YoY due to lower volumes and negative operating leverage. On the profitability front, PAT was at Rs. 31.8 crore, down 85.4% YoY and below our estimate of Rs. 105.1 crore.

Valuation & Outlook

The environmental concerns in Delhi had brought forth the urgency of using cleaner fuels, putting the company in a sweet spot. IGL has a unique identity of a company with a rare mix of volume growth and strong margins. However, there is a risk to its business growth if PNGRB implements open access policy for CGD network and faster adoption of EVs. In the near term, due to Covid-19 initiated lockdown, CNG and industrial/commercial PNG sales dipped in Q1FY21 and have not fully recovered yet. We believe a full recovery in demand will take time. We maintain HOLD recommendation on the stock and value standalone IGL at Rs. 378/share (21x FY22E EPS) and investment in Central UP Gas (CUGL) and Maharashtra Natural Gas (MNGL) at Rs. 32/share to arrive at a target price of Rs. 410.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_IGL_Q1FY21.pdf

Shares of INDRAPRASTHA GAS LTD. was last trading in BSE at Rs.406.9 as compared to the previous close of Rs. 413.55. The total number of shares traded during the day was 417732 in over 11572 trades.

The stock hit an intraday high of Rs. 417.4 and intraday low of 402.95. The net turnover during the day was Rs. 170361726.

Source : Equity Bulls

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