Indraprastha Gas Q4 Review – Concerns Remain Despite A Decent Performance: Motilal Oswal

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Indraprastha Gas Ltd. reported a beat on our Ebitda estimate, although volumes were strong YoY. Total volumes stood at 7.7 million metric standard cubic meter per day (up 14% YoY), with compressed natural gas volumes at 5.7 mmscmd (up 16%) and piped natural gas volumes at 2.1 mmscmd.

Ebitda/standard cubic meter stood at Rs 7.2 (estimate Rs 6.2). Aggregators account for 30-40% of total CNG sales for IGL.

The onslaught of electric vehicles may challenge volume growth in the medium-to-long term.

Administered pricing mechanism gas price has been revised for H1 FY23 and stands at $6.1/metric million British thermal unit – the highest since the adoption of the gas pricing formula in CY14.

Moreover, there is likely to be a further increase in APM gas prices in H2 FY23E.

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