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IGL’s 1QFY25 standalone EBITDA, at INR 5.8bn, was higher than JMFe/consensus of INR 5.1bn/INR 5.5bn due to higher EBITDA margin at INR 7.4/scm (vs. JMFe at INR 6.1/scm) driven by lower cost of gas and slightly higher realisation. However, overall sales volume was 2% lower at 8.6mmscmd vs. JMFe of 8.8mmscmd due to weak PNG volume while CNG volume was in line. Hence, PAT at INR 4.0bn was also higher vs. JMFe/consensus of INR 3.3bn/INR 3.8bn. IGL’s share of CUGL and MNGL’s PAT was INR 808mn in 1QFY25 (vs. INR 815mn in 4QFY24). We maintain BUY (unchanged TP of INR 550) due to IGL’s: a) decent pricing power, and b) steady volume growth story based on its existing lucrative NCR market and expansion into new, lucrative nearby cities and intercity traffic. At CMP, IGL is trading at consolidated FY26 P/E of 16.2x and FY26 P/B of 3.5x.

* EBITDA margin higher at INR 7.4/scm vs. JMFe of INR 6.1/scm due to lower cost of gas and slightly higher realisation: Gross margin was higher at INR 13.2/scm in 1QFY25 vs. JMFe at INR 11.8/scm (vs. INR 13.1/scm in 4QFY24) as: a) average cost of gas was lower at USD 10.5/mmbtu or INR 31.6/scm vs JMFe of USD 10.9/mmbtu (vs. USD 10.8/mmbtu or INR 31.6/scm in 4QFY24); and b) net sales realisation was higher at INR 44.8/scm in 1QFY25 vs. JMFe of INR 44.4/scm (and INR 45.3/scm in 4QFY24). However, opex normalising to INR 5.8/scm was largely in line (vs. one-off jump to INR 6.6/scm in 4QFY24 on account of one-time employee reward and clubbing of FY24 CSR expense in 4QFY24). Hence, EBITDA margin was higher at INR 7.4/scm in 1QFY25 vs. JMFe of INR 6.1/scm (and vs. INR 6.6/scm in 4QFY24).

* Sales volume 2% below JMFe (down 1% QoQ) driven by lower PNG volume while CNG volume was in line: Sales volume at 8.6mmscmd or 786mmscm (down 1% QoQ and up 5.3% YoY) was 2% below JMFe as PNG sales volume reversed the strong growth of 4QFY24. PNG sales volume was 8% below JMFe and down 7.2% QoQ at 199mmscm (but still up 7.6% YoY) with domestic PNG volume at 61mmscm (down 6.8% QoQ but up 16% YoY) and industrial/commercial PNG volume at 92mmscm (down 11.2% QoQ but up 5.6% YoY). However, CNG volume was largely in line with JMFe at 6.5mmscmd or 587mmscm or (up 1.2% QoQ and up 4.6% YoY).

* Maintain BUY on decent pricing power and steady volume growth story: We maintain BUY on IGL (unchanged TP of INR 550) due to its: a) decent pricing power given that CNG is 45%/20% cheaper than diesel/petrol, and b) steady volume growth story based on its existing profitable NCR market and expansion into new, lucrative nearby cities and intercity traffic. At CMP, IGL is trading at FY26 consolidated P/E of 16.2x and FY26 P/B of 3.5x. Key Risks: muted volume growth and margin concerns due to rise in penetration of electric vehicles and/or cut in APM gas allocation, and sharp hike in HPHT/spot LNG gas price.

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SEBI Registration Number is INM000010361