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Dolat Capital Report
Delhi Government has approved electric vehicle policy for Motor Vehicle Aggregators and Delivery Service Providers - 2023. This policy is pending for final approval at the Delhi Governor's office. The policy has set targets for MVA & DSP vehicle fleet conversion to EV, the policy mandates induction of 5%/50%/100% of EVs in the fleet within six months /three years/five years respectively.
Although, the May 2023 draft mentioned these targets being applicable on net new on-boarded vehicles. The overall target is of 100% EV fleet by CY30. Total volume break of Indraprastha Gas Ltd. 65%/25%/10% Delhi/NCR/New geographical areas respectively.
Cabs/taxis consume only 15% of the total CNG volume of IGL or only 11% of the total IGL volume. If the cab is registered surrounding region of Delhi (Uttar Pradesh/Haryana/Rajasthan/Uttarakhand) then this EV policy is not mandatory.
News flow suggests only 40% of taxis/cabs that are Delhi registered plying on Delhi roads, the remaining taxis are from surrounding states.
Hence the impact on the volume will be much less than the 11% which will be spread over the next six years.
The loss of CNG volume from the new EV policy can be recovered through the New GA expansion plans. IGL guided the new GA (out of NCR/Delhi) to contribute ~40% of the total volume in the next two to three years.
We expect a new EV policy can impact on CNG volume in the range of 2% to 3% per annum. Hence, we have lowered the target price to Rs 572 (earlier Rs609). We maintain 'Buy' recommendations.
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