Indraprastha Gas is likely to see minimal impact on its earnings from the recent INR depreciation. The company sources about 40% of its CNG gas requirement from RLNG, and the QTD average JKM LNG price has eased to $11.15/mmbtu, down 5% from the previous quarter's $11.79/mmbtu.
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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
volume growth at ~7% CAGR over FY25-33E;
robust margins supported by higher gas allocation from the high-pressure, high-temperature fields to the priority sector; and
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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