IGL share price target reports by brokerages below. See what is analyst's view on IGL share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
We are upgrading Indraprastha Gas (IGL) from Sell to Buy based on 41.3% upside from CMP to our revised DCF-based TP of Rs431, assuming regulated tariff, post the 30% correction in the stock from three months ago.The new TP includes Rs52/sh we estimate for the new CGD areas (GAs) under development. We have cut our FY20-22E estimates by 1.9%/16%/15.2% based on volume and margin assumptions tempered for the twin impact of COVID19 and the slowdown. We see moderation in IGL’s city gas volume growth in 4QFY20 to 9% vs 13.4% in 3QFY20, implying nil growth in March 20. Further we could see nil growth in 1HFY21~with contraction of 6% likely in 1QFY21E, if the COVID 19 and slowdown impact continue for another six months. And growth is likely to revive in 2HFY21E, assuming normalcy is restored by Sept/Oct 20. This implies 8% annual volume growth in FY21Evs 11.5% in FY20E and 13.7% on average for FY17-19. We still have concerns over the potential transition to 20% open access for IGL’s Delhi Franchise, which could pose the risk of attrition in CNG and Industrial market share to the extent of 20%. Our Buy is based on (i) the improved risk-reward at current valuations, which in our view prices in the above concern, (ii) the potential for long term growth from its new license areas (GAs), which we value at Rs52/sh, and (iii) the healthy balance sheet that would support a revival in returns once the capex over the next 2 years starts paying off.
We tweak our estimates to incorporate healthy 9M performance. IGL remains a play on rising pollution concerns. Expanding geographical reach coupled with increased cars/taxis conversion and new bus addition in Delhi will drive earnings. Also, ban on competing industrial fuel is a major positive. Sharp drop in spot LNG prices offer new margin levers for the company. Reiterate “BUY” with a three-year DCF-based PT of Rs616 (Rs468 early) on rollover
We tweak our estimates to incorporate better than expected H1 performance and lower tax rate. IGL remains a play on rising pollution concerns. Expanding geographical reach coupled with increased cars/taxis conversion and new bus addition in Delhi will drive earnings. Also, ban on competing industrial fuel is a major positive. We see limited threat to recent concept paper released by PNGRB to allow new players in existing geography given high entry barriers and concerns on allocation of subsidized APM gas. Reiterate “BUY” with a three-year DCF-based PT of Rs468 (Rs400 early).
Volume traction + margin expansion We maintain our estimates for FY20 & FY21. IGL remains a play on rising pollution concerns. Expanding geographical reach coupled with increased cars/taxis conversion and new bus additions in Delhi will drive earnings. Also, report of ban on competing industrial fuel is a major positive. We see limited threat to recent concept paper released by PNGRB to allow new players in existing geography given high entry barriers and concerns on allocation of subsidized APM gas. Reiterate “BUY” with a three-year DCF- based PT of Rs378 (Earlier Rs360) on rollover.
Stance: Entering new GAs is a better bet for new entrants, rather than competing with incumbents, given (1) Assurance on APM gas allocation, and (2) Marketing and infrastructure exclusivity. Hence, we do not foresee material threat to business. IGL generates OCF yield of almost 5.5% and RoIC of >30% over FY20/21E. Valuations are contextually moderate at 22.0x FY21E EPS. Maintain BUY with a TP of Rs 384/sh.
Environmental concerns in Delhi have brought to the fore the urgency of using cleaner fuels, which puts IGL in a sweet spot. IGL has a unique identity of a company with a rare mix of volume growth and strong margins, supported by supportive governmental initiatives. Also, growth from new areas like Rewari, Dharuhera, Bawal, Karnal, etc would add to volumes. Webelieve IGL’s investment in Maharashtra Natural Gas (MNGL) and Central UP Gas (CUGL) is positive, giving it access to gas demand in Pune, Kanpur, Bareilly, Unnao and Jhansi. However, given the current valuations, we have a HOLD recommendation on the stock. We value standalone IGL at 24x EPS of Rs 13.6/share and investment in CUGL and MNGL at ~Rs 21 per share to arrive at a target price of RS350.
We have observed a rise in the cost of raw material (natural gas) by 34% YoY, leading to a drop in EBITDA margin to 19.5% in 4QFY19 from 23.6% in 4QFY18. We have retained Buy rating on IGL with a revised target price of Rs411 (from Rs385 earlier) based on a forward P/E of 25x March 2021E estimated earnings.
The company has guided for domestic revenue growth of 10-15% YoY for FY20. KKC expects good growth in HHP segment mainly driven by data center, commercial realty, manufacturing etc. KKC is seeing weak demand from exports markets amid uncertain global growth and volatile forex markets. We have modelled 10%/11% Revenue/PAT CAGR over next two years (FY19-21E). The stock is currently trading at 27/23x FY20/21E. We maintain our Accumulate rating on the stock with TP of Rs841 (26xFY21E).
We do not expect EVs to be a threat to IGL in the short-to medium-term. We expect volume growth to stay strong at 12%/11% in FY20/21. In the short term, EBITDA/scm may increase due to the INR appreciation. However, we remain conservative with estimate of INR5.8/INR5.9 in FY20/21. Both IGL’s subsidiaries — MNGL and CUGL – have been growing at a steady pace. Contribution from JVs for 9MFY19 stands at INR695m, +25% YoY. We expect ROEs of 20.1%/19.9% in FY20/21. The stock is trading at 23.4x FY20 standalone EPS of INR12.7. We expect standalone EPS CAGR of 16% during FY18-21. We move our valuation from Dec’20 to FY21, valuing IGL at 24x (unchanged) FY21 standalone EPS of INR14.6, adding the contribution from its JVs. With a target price of INR389 (earlier: INR381), we reiterate our Buy recommendation for the stock.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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