Indraprastha Gas shares continue to rise post Q1 results, should you buy?

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Updated: August 23, 2016 5:39:54 PM

Share price of Indraprastha Gas rose nearly 8 per cent on Tuesday after IGL posted 44.39 per cent increase in its net profit at Rs 148.01 crore for the quarter as against Rs 102.51 crore for the same quarter in the previous year

Indraprastha Gas shares continue to rise post Q1 results, should you buy?Indraprastha Gas(IGL) posted 44.39 per cent increase in its net profit at Rs 148.01 crore for the quarter as against Rs 102.51 crore for the same quarter in the previous year. (Photo: Reuters)

Indraprastha Gas(IGL) shares continued to rise on Tuesday after the company’s first quarter results announced on Monday beat estimates. Share price of the company rose nearly 8 per cent on Tuesday after IGL posted 44.39 per cent increase in its net profit at Rs 148.01 crore for the quarter as against Rs 102.51 crore for the same quarter in the previous year. Total income of the company increased by just 0.04 per cent at Rs 907.69 crore for quarter under review as compared to Rs 907.34 crore for the quarter ended June 30, 2015. Analysts have given a thumbs up to the first quarterly results.

At 12.10 pm, Indraprastha Gas(IGL) shares were trading 4.64 per cent up at Rs 763. The scrip opened at Rs 740.00 and has touched a high and low of Rs 786.10 and Rs 735.30 respectively. The BSE group ‘A’ stock of face value Rs 10 has touched a 52-week-high of Rs 786.10 on Aug 23, 2016 and 52-week-low of Rs 433.40 on Aug 25, 2015. Later, the scrip ended 3.85 per cent up at Rs 757.25.

Religare Capital Markets said IGL’s June quarter earnings surged by 44% year-on-year to Rs 148.01 crore, outperforming estimates comprehensively, driven by higher volumes, improved gross spreads, higher EBITDA (and reduction in other expenses. While maintaining the ‘Buy’ rating the brokerage house said, “Volume growth is likely to sustain, which could boost earnings growth over FY17E-FY19E – a reiteration of our primary investment thesis.” It also sees a strong re-rating potential for the stock.

Japanese brokerage house Nomura said that the first quarter numbers are reassuring. It reiterates ‘Buy’ rating with target price of Rs 900 and said ,”Volume growth can get better; pollution focus remains strong. Unlike in the past, as winter eased into summer and monsoon this year, focus has continued on high pollution in Delhi. We think this focus will only increase once pollution levels rise in upcoming winters. The pace of conversion of both CNG and piped-gas is rising.”

Indraprastha Gas, incorporated in 1998, is engaged in distribution of CNG and PNG in Delhi. In 1999 the company took over Delhi City Gas Distribution Project from GAIL (India). IGL laid the network for the distribution of natural gas in the National Capital of Delhi to consumers in the domestic, transport, and commercial sectors.

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