IGL’s 4QFY18 revenue came in at Rs 1,233 crore, up 23.1% YoY led by 11.3% YoY increase in volumes to 5.36mmscmd and 10.5% YoY increase in realisation to Rs 25.6/scm. EBITDA stood at Rs 291 crore up 26.9% YoY on account of higher gross margin, up 33bps. APAT came in at Rs 1.75.
We expect the volume growth momentum to continue for the company as, (1) State government has accepted the proposal to procure 2,000 new buses in FY19, and (2) Expansion of its pipeline network in the new areas- Karnal, Rewari and part of Gurugram will add volumes from 2HFY19 onwards. CNG prices are 39-45% discount to Diesel and Petrol respectively.
This should provide an adequate cushion and pricing power to IGL to maintain its EBITDA margins above R6/scm over FY19-20E. PNGRB has planned to roll out CGD network in 86 Geographical Areas, that is, more than double the existing authorised GAs.
We believe that with rich expertise in highly technical business and strong balance sheet, IGL will pursue high-potential GAs.
We remain positive on the fundamentals of IGL, led by a monopolistic business model, a strong B/S, robust growth from investments in subsidiaries and foray into newer geographies. Our SOTP target is Rs 422/sh (30x FY20E standalone core EPS + 25x CUGL/MNGL EPS share to IGL). Maintain BUY.
CNG and PNG volumes were at 3.98 (+10.2 YoY%) and 1.38 respectively. Cost of gas was Rs 14.05/scm, up 126bps YoY owing to higher LNG and RasGas prices.
Opex was Rs 5.5/scm. IGL’s share of net income from CUGL and MNGL was at Rs 17 crore in 4Q. Company incurred a capex of Rs 130 crore during the quarter.
Volume growth will continue, owing to the addition of new buses and expansion in new areas.