Tax Tweak Could Deliver Margin Bonanza For Indraprastha Gas, Says Motilal Oswal Maintaining 'Buy'

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Motilal Oswal Report

As per media reports and our channel checks, Indraprastha Gas Ltd. could see a potential Ebitda/standar cubic metre upside of 16-20% due to a change in the tax rate on gas sourced from Gujarat (official confirmation is awaited).

Moreover, IGL could see Ebitda margin benefits of Rs 0.7-1.3/scm from Petroleum and Natural Gas Regulatory Board’s move to a two-zone tariff regime. We have a Buy rating on IGL.

While Mahanagar Gas has been our preferred pick in the CGD space, we estimate a minor Ebitda upside of 3-4% for Mahanagar Gas from this tax change (if confirmed).

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