Buy Indraprastha Gas, target price Rs 510: HDFC Securities

HDFC Securities has buy call on Indraprastha Gas with a target price of Rs 510. The current market price of Indraprastha Gas is Rs 399.05. Time period given by analyst is one year when Indraprastha Gas Ltd. price can reach defined target.

Indraprastha Gas Ltd., incorporated in the year 1998, is a Large Cap company (having a market cap of Rs 28000.03 Crore) operating in Gas & Petroleum sector.

Indraprastha Gas Ltd. key Products/Revenue Segments include Gas Natural and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-09-2022, the company reported a Consolidated Total Income of Rs 3973.01 Crore, up 23.21 % from last quarter Total Income of Rs 3224.59 Crore and up 112.09 % from last year same quarter Total Income of Rs 1873.24 Crore. Company reported net profit after tax of Rs 357.15 Crore in latest quarter.

Investment Rationale
The BUY recommendation on Indraprastha Gas (IGL) with a target price of INR 510 is based on (1) robust volume growth at ~13% CAGR over FY22-25E; (2) regulatory support from the government to curb pollution in the Delhi/NCR region; and (3) a strong portfolio of mature, semi-mature, and new geographical areas. Q2FY23 EBITDA was at INR 5.3bn (-1% YoY, -15% QoQ), below estimate, while APAT at INR 4.2bn (+4% YoY, -1% QoQ) came in marginally above estimate, supported by higher-than-expected other income and marginally lower tax expense.

Promoter/FII Holdings
Promoters held 45.0 per cent stake in the company as of 30-Jun-2022, while FIIs owned 20.34 per cent, DIIs 16.79 per cent.