Company Update : Indraprastha Gas Ltd By Motilal Oswal Financial Services Ltd
Beat on EBITDA driven by stronger-thananticipated margins
* IGL delivered a 12% beat on our EBITDA estimates as margin came in 9% above our estimates and volumes remained strong. While CNG volumes came in line with estimates, PNG volumes were above estimates. The impact of APM twin de-allocation was clearly visible as margins contracted INR2.2/scm QoQ. We note that Spot LNG prices were high, averaging USD13.9/mmbtu in 3Q (up 7% QoQ), and continue to remain elevated in 4QFY25’td, averaging USD14.2/mmbtu. On 25th Nov’24, IGL implemented CNG price hikes of ~INR1.5 to INR4 per kg, affecting around ~30%-35% of the regions where its CNG business operates (excluding Delhi). Further, the Delhi elections are due in Feb’25. In a recent press release, IGL stated that, as communicated by GAIL, its domestic gas allocations had been increased by 31%, effective from 16th Jan’25. This adjustment raises its share of domestic gas in the CNG segment from 37% to 51%.
* IGL currently trades at 18x FY26E P/E, while its 1Y fwd. LTA is 21.5x P/E.
* Total volumes were in line with our estimate at 9.1mmscmd (+7% YoY).
* While CNG volumes came in line with estimates, PNG volumes were above estimates.
* EBITDA/scm came in above our est. at INR4.3.
* Gross margin was lower QoQ while opex remained similar QoQ.
* Resulting EBITDA was 12% above our estimate at INR3.6b (-35% YoY), primarily due to higher-than-estimated margins and robust volumes.
* Other income was significantly above our estimate, resulting in a 41% beat on PAT of INR2.9b (-27% YoY).
* The company has authorized a 1:1 bonus issue, with 31st Jan’25 set as the record date.
* In 9MFY25, IGL’s net sales grew 5% to INR110b, while EBITDA/PAT declined 20%/18% YoY to 14.8b/11.2b.
