IGL, MGL realize higher gas prices in Q3; Shares fall to 52-week low

It should come as no surprise that shares of MGL and IGL fell over 3-5% in morning trade on Wednesday. On Wednesday, the shares of both the companies reached a new 52-week low on the National Stock Exchange.

Analysts said both the companies are dependent on domestic gas supply to meet their requirements and margins have come down due to low availability of domestic gas for their compressed natural gas (CNG) and domestic piped natural gas (PNG) businesses. . Companies had to resort to high cost imported gas or spot gas cargo to meet their requirement.

IGL’s 3QFY22 Standalone EBITDA 470 crore was down 11% sequentially, but 7-9% higher than JM Financial Ltd’s expectation and consensus estimate 430-440 crores. Higher-than-expected volume growth and operating leverage helped it outperform. During the quarter, IGL witnessed a 22% year-on-year growth in its sales volume. Ebitda Margin down 6.7 Vs. Per Standard Cubic Meter (scm) 8.0 as seen during the previous quarter. Ebitda is earnings before interest, taxes, depreciation and amortization.

Analysts at Kotak Institutional Equities said, “IGL’s 3QFY22 results were above our estimates, driven by higher-than-expected margins despite a rise in LNG prices.”

MGL also saw volume growth of 19.2% year-on-year. However, its Ebitda Sequentially, 103 crore declined sharply by 65.8%. Company’s Ebitda Margin 3.4/scm was too low in 3QFY22 10.5 in 2QFY22.

Analysts said the long-term growth prospects of city gas distribution companies remain intact, driven by strong demand for cleaner and cheaper fuel gas. However, domestic gas prices are likely to pick up further in FY13, a significant turnaround in the near future.

Analysts at JM Financial have cut EBITDA estimates for IGL by 6-7% for FY22-24 and 8-19% for MGL, taking into account potential margin risks on account of continued high global gas prices. keep.