'Buy' Indraprastha Gas Shares Maintains HDFC Securities — Check Revised Target Price

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HDFC Securities Institutional Equities

HDFC Securities maintains 'Buy' recommendation on Indraprastha Gas Ltd. with a target price of Rs 248, implying an upside of 29% - given

1. volume growth at ~7% CAGR over FY25-33E;

2. robust margins supported by higher gas allocation from the high-pressure, high-temperature fields to the priority sector; and

3. a strong portfolio of new geographical areas ensuring volume growth visibility.

Indraprastha Gas' blended gas cost during the current quarter has come off on the back of reduced RLNG price in the international markets. Reduction in cost should offset the impact of current indian rupee depreciation, leading to a negligible impact on IGL’s per unit gross profit.

However, if the blended gas cost remains at the current levels, every two-rupee depreciation of INR against USD will necessitate a price hike of INR 1.38/kg for the CNG segment and Rs 0.52/scm for the DPNG segment, which in our opinion should not be a challenge for IGL.

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