The Q2 EBITDA for Indraprastha Gas at Rs 3.1 bn was in line with our/street estimate and PAT at Rs 1.9 bn was 3% beat on our estimate (-3% vs. street) on higher other income.
The Q2 EBITDA for Indraprastha Gas at Rs 3.1 bn was in line with our/street estimate and PAT at Rs 1.9 bn was 3% beat on our estimate (-3% vs. street) on higher other income. Ebitda margin fell only by 2% q-o-q/3% y-o-y to Rs 5.7/scm (5.8 in Q1FY19, 5.9 in Q2FY18) despite 14% q-o-q/42% y-o-y increase in gas costs. Volumes grew 7% q-o-q/13% y-o-y to 542 mmscm on continued strong growth in industrial/commercial PNG (helped by FO & petcoke ban) and CNG (on regulatory push to convert vehicles).
We’ve tweaked our FY19/20E EPS on higher Ebitda margin and other income and introduced FY21E EPS at `14.4. Our DCF-based TP remains unchanged at Rs 265. We see CMP pricing in 3x volume growth (13% CAGR) over next decade with gradual improvement in margin, which we expect sufficiently accounts for IGL’s organic growth and new CGD license awards. Maintain hold.
CNG sales at 406 mmscm increased 8% q-o-q/13% y-o-y due to strong regulatory push to convert vehicles and increased availability of CNG stations (IGL aims to take the count to 490). PNG sales rose 5% q-o-q /+13% y-o-y to 136 mmscm. Industrial/commercial volume, up 10% q-o-q/25% y-o-y, majorly contributed to the rise on FO ban and continuous customers addition in Delhi. IGL got access to cantonment area with which help it is aiming to add 2 lakh domestic PNG connections in FY19.
IGL recently received a favourable decree on its dispute with Haryana City Gas (HCG) on Gurgaon district CGD. Supreme Court suggested IGL to take over natural gas supply in Gurgaon district from HCG including pipeline infrastructure to which both the parties have agreed. Valuation of the area will be done by Deloitte as an independent valuer.