Indraprastha Gas Ltd - Q4 FY21 Result Report - YES Securities

(Rating: ADD, TP: Rs595, Upside: 16%)

Result Highlights - Gas sales recover in 4Q; margins strong

- The 4QFY21 earnings stood broadly in-line with our estimates, even as it missed street estimates. The FY21 was marked by weaker sales but stronger margins, which helped shore up earnings. We believe that we might continue to see relatively stronger margins, going ahead, on account of considerably higher Petrol & Diesel prices (alternate competing fuels).

- The second wave of Covid-19, has to an extent (if not completely) derailed the recovery in gas sales. The gas sales over Apr-May'21 is believed to be lower by ~25-30% (compared to FY20), which though better than a 56% decline over Apr-Jun'20, but is still directionally weaker, thereby slowing the momentum seen in 2HFY21 and delaying an expected recovery in sales over FY22. That said, as the situation normalizes on backs of on-going vaccination drive, the sales and vehicle conversion should recover.

- We maintain our ADD rating on IGL, with a TP of Rs 595/sh, as we expect CGD to be a multi-year compounding story, in-light of GoI's push for development of CGD infrastructure and higher adoption of natural gas as a cleaner fuel source. Our target price (TP) is based on DCF, with a terminal growth rate of 4% post projection period of FY21-30e and WACC of 10.3%, where FCFF of IGL-SA , MNGL (50% stake) and CUGL (50% stake) are individually discounted and added proportionately to arrive at consolidated equity value.

Shares of INDRAPRASTHA GAS LTD. was last trading in BSE at Rs.532.85 as compared to the previous close of Rs. 512.45. The total number of shares traded during the day was 365949 in over 10329 trades.

The stock hit an intraday high of Rs. 544.85 and intraday low of 519. The net turnover during the day was Rs. 196324446.

Source : Equity Bulls

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