LKP has maintained a 'Neutral' rating on Indraprastha Gas with a target price of Rs 386, in its August 5, 2014 research report.
"IGL's operating profit of Rs2.07bn was in line with our estimate. Net revenue for the quarter decreased by 10.3% qoq to Rs8.67bn due to fall in realisation of 9% qoq and 1.4% qoq decline in total sales volume. CNG realisation declined from Rs40.9 to Rs36.4/kg because of change in CGD guideline whereby 100% APM gas was allotted CNG and domestic PNG. CNG volume increased by 1.6% qoq to 194mnkg (yoy +2.4%). PNG volume for the quarter decreased sequentially by 9.8% while realisations decreased by 2.1%. Gas cost for the quarter decreased by 18.9% qoq to Rs18.9/scm. Consequently, IGL's gross margin for the quarter increased by 14.4% qoq to Rs9.55/scm (yoy +5.5%). EBITDA/scm for the quarter stood at Rs6.06/scm (yoy +6.4% qoq +10.1%) as against our estimate of Rs5.68/scm. Net profit of Rs1.14bn was higher than our estimate of Rs984mn due to increase in useful life of the assets as per the new Companies Act. Adjusting for this, net profit would have been higher by 8.7% than our estimate. IGL's litigation with PNGRB still remains on overhang on the stock. We revise our rating on the stock from BUY to NEUTRAL with a price target of Rs386. At the CMP, the stock is trading at 7.5x and 3.5x FY16e EPS and EBITDA respectively."
"IGL's net revenue for the quarter decreased by 10.3% qoq to Rs8.67bn (yoy -3.8%) due to fall in realisation of 9% qoq and 1.4% qoq decline in total sales volume. CNG realisation declined from Rs40.9 to Rs36.4/kg because of change in CGD guideline whereby 100% APM gas was allotted CNG and domestic PNG. CNG volume increased by 1.6% qoq to 194mnkg (yoy +2.4%). Average CNG realisation during the quarter stood at Rs23.9/scm (yoy -8.6% qoq -11.1%). PNG volume for the quarter decreased sequentially by 9.8% due to lower offtake from bulk customers and lower Fuel Oil price compared to LNG. PNG realisations decreased by 2.1% qoq to Rs30.1/scm. IGL's operating profit for the quarter increased by 8.5% qoq to 2.07bn (yoy +7.3%), which was exactly in line with our estimate. Gas cost for the quarter decreased by 18.9% qoq to Rs15.9/scm. Consequently, IGL's gross margin for the quarter increased by 14.4% qoq to Rs9.55/scm (yoy +5.5%). EBITDA/scm for the quarter stood at Rs6.06/scm (yoy +6.4% qoq +10.1%) as against our estimate of Rs5.68/scm. IGL's operating profit margin for the quarter increased by 412bps sequentially to 23.8%."
"IGL's litigation with PNGRB still remains on overhang on the stock. We revise our rating on the stock from BUY to NEUTRAL with a price target of Rs386. We value IGL on DCF basis. We have used WACC of 12.3% and terminal growth rate of 4% for DCF valuation. At the CMP, the stock is trading at 7.5x and 3.5x FY16e EPS and EBITDA respectively," says LKP research report.
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