Indraprastha Gas is a Large Cap company having registered market cap of 34,671 crore during Friday’s closing. Shares of the Indian natural gas distribution company closed on a green note by gaining 1.11% during its previous trading session, however, research analysts see an upside potential of 104% from the current market price of the stock in the 24-month target frame. Has been
Research analysts at Ventura Securities said, “Among the 4 listed CGD plays, IGL remains our top pick as it has been one of the most consistent companies in terms of volume growth and profitability.”
“We resume coverage on IGL with buy for a price target of Rs. 1,009 (13x FY26 EV/EBITDA) representing a potential growth of 105% from a CMP of Rs. 491. We expect IGL to report NG 4 year CAGR volumes of 13% to 4,155 million SCM by FY26. Considering a benign pricing environment and a stable EBITDA per SCM (INR 8-9 per SCM), we project a 4-year CAGR of 25%/16%/15% in Revenue/EBITDA/PAT to INR 18,820/3,380/ 2,598 are expected. crore over the FY22-26 period,” said research analysts at Ventura Securities.
“Despite 65% of its volume being consumed from existing geographies of NCR, we expect it to grow at 13.1% CAGR from 6.5 MMSCMD (FY22) to 10.7 MMSCMD by FY26. If we include volume sales of associate entities, Maharashtra Natural Gas Limited (MNGL) and Central UP Gas Limited (CUGL), FY26 volumes are expected to grow to 11.4 mmscmd from 7 mmscmd (FY22) in FY26,” he added. .
“With the rollout of additional 450 new CNG stations (75 stations in FY23) to 1,161 stations, CNG volume share is expected to increase by 220 bps to 74.4% in the same period. PNG household connections are expected to grow to 32.2 lakh households (12% CAGR) and PNG industrial + commercial volumes to 520.5 MMSCM (10% CAGR), taking the total connections to 12,393 (+4,673 connections) by FY26. IGL added GAs of Ajmer, Pali, Rajsamand, Kaithal, Kanpur, Fatehpur and Hamirpur during the 10th bidding round and Banda, Chitrakoot and Mahoba districts during the 11th bidding round,” said research analysts at Ventura Securities.
“On the back of strong volume growth, we expect IGL’s revenue to grow at a CAGR of 25% to INR 18,820 crore over the period FY22-26E. EBITDA is expected to grow at a CAGR of 16% to Rs 3,380 crore, while net income is expected to grow by 15% to Rs 2,598 crore. We expect EBITDA and PAT margins to decline from ~24.5% and 19.5% levels respectively to ~18% and 13.8% in FY26. This decline in margin is a result of the current higher pricing (compared to FY22) even after considering the reduction in pricing following the recommendations of the Kirit Pareek Committee. RoE is expected to reduce by 250 bps to 17.3%, while ROIC is expected to improve by 2,030 bps to 55.3%, respectively, by FY26. We expect IGL to get Rs. ~1300 crore capex annually as it expands and deepens its network,” Ventura Securities further added.
Share of Indraprastha Gas on NSE on Friday 494 per share, though considering the target price of the stock 1,009 set by Ventura Securities has a potential upside potential of 104% on the stock from the current market price. The stock touched a 52-v high At 501.25 (18-Apr-2023) and at 52-week low 335.35 on (17-Jun-2022). The lifetime high of the stock is Rs 602.05 and its lifetime low is Rs. 11.13 Each level.
Disclaimer: The views and recommendations in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to do due diligence with certified experts before making any investment decision.
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