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Systematix Research Report
Indraprastha Gas Ltd. reported a mixed set of numbers where revenue was below our estimate owing to lower than forecasted volume while better margin made Ebitda in line.
Revenue/Ebitda stood at Rs 34.4/6.6 billion, up marginally 1.6%/ and 2.3% QoQ, respectively. Total sales volume saw a slight jump of 1.2% QoQ/2.6% YoY to 8.3 million metric standard cubic metre per day (our estimate 8.6 mmscmd) due to a marginal increase in both compressed natural gas and piped natural gas volumes to 6.2/2.1 mmscmd, up 1.3%/1.2% QoQ.
Gross margin/standard cubic metre contracted 1.7%QoQ to Rs 13.9/scm (versus 14.1/scm in Q1 FY24) due to a downward revision in CNG prices while the gas cost was stable sequentially at Rs 31.2/scm.
Ebitda/scm was flattish QoQ at Rs 8.4 (21.1%YoY) but above our estimate of Rs 8.1/scm due to lower opex/scm of Rs 5.5/scm (-4.4% QoQ), some of the newer geographical areas reported lower Ebitda and hence it dragged the overall Ebitda/scm.
Infrastructure development in NCR declined due to floods and the G20 summit which caused permits and NOCs to delay halting stations in addition to just eight CNG stations during the quarter. CNG car conversion rate increased to an average of 15900 vehicles per month in Q2 FY24 versus 14100 in Q1 FY24.
The current volume stands at 8.5 mmscmd while IGL continues to guide ~9 mmscmd exit rate volume for FY24.
However, due to the EV policy uncertainty, the management abstained from providing any guidance for FY25E.
We marginally raised our Ebitda estimates upwards by 3% on a better margin. We believe normal growth in NCR regions and significant improvement in other GAs with the addition of interstate buses/ dumpers in its fleet shall help it to reach its estimated volume prediction.
While we continue to maintain 'Buy' on the stock we reduce our price-to-earnings ratio based target price to Rs 446 (versus 556 earlier), based on 14 times on FY25E as risk on long-term growth prospects due to the new EV policy remains an overhang.
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