Buy Indraprastha Gas, target price Rs 450: Emkay Global Financial Services

Emkay Global Financial Services has buy call on Indraprastha Gas Ltd. with a target price of Rs 450.0. The current market price of Indraprastha Gas Ltd. is Rs 365.9.

Indraprastha Gas Ltd., incorporated in the year 1998, is a Large Cap company (having a market cap of Rs 25609.53 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 31-03-2022, the company has reported a Consolidated Total Income of Rs 2480.31 Crore, up 10.44 % from last quarter Total Income of Rs 2245.83 Crore and up 42.69 % from last year same quarter Total Income of Rs 1738.30 Crore. Company has reported net profit after tax of Rs 358.60 Crore in latest quarter.

Investment Rationale:
Expect to achieve double-digit 3-year volume CAGR; though building slowdown overlong term. IGL’s management has maintained its 13% volume CAGR guidance during FY22-25, with core Delhi growing at 6-7%. Our segment-wise vehicle parc model for Delhi impliesthat this is achievable and that robust growth in Noida-Ghaziabad and Gurugram is also acceptable owing to their overall rapid development as satellites.

EV-related risks in Delhi, like mandatory registration for app-based cabs and vehicle age limits, would not hold in these satellites as they are located in different states. DTC buses and auto-rickshaw population can fall drastically but offset by growth in CNG cabs, LGVs and private vehicles. The I/C PNG segment should also keep growing as polluting fuel bans are expanded around NCR. IGL also expects Ajmer and Muzaffarnagar to be sizeable GAs, driven both by IPNG and CNG.

Promoter/FII Holdings
Promoters held 45.0 per cent stake in the company as of 31-Mar-2022, while FIIs owned 19.88 per cent, DIIs 16.91 per cent.