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R u p e e a n d h i g h e r c o s t s i m p a c t p r o f i t a b i l i t y …
Indraprastha Gas (IGL) declared its Q3FY12 results with revenues of
| 663.1 crore, EBITDA of | 150.4 crore and PAT of | 69.1 crore. The
profitability was lower than our estimates mainly on account of higher gas
costs due to higher LNG prices and stoppage of gas supplies from RIL.
Also, the depreciation of the rupee and inability of the company to pass
on higher costs to customers led to lower than expected profits.
However, we believe results would be better in Q4FY12 as IGL has now
increased CNG prices to | 33.75/kg and spot LNG prices have declined in
the global markets. In Q3FY12, blended sales prices were increased by
14.5% YoY to | 23.4/scm, mainly to pass on increased raw material costs.
The increased sales volumes in the CNG segment and natural gas sales
volume to industrial and commercial customers contributed to the 25.9%
YoY increase in volumes to 313.8 mmscm (3.4 mmscmd). We expect
IGL’s volumes to increase to 1220 mmscm and 1412 mmscm in FY12E
and FY13E, respectively. We recommend a HOLD rating on the stock with
a price target of | 359.
ƒ YoY increase of 25.9% in gas sales volume
IGL reported a 25.9% increase in gas sales volume from 249.2
mmscm in Q3FY11 to 313.8 mmscm in Q3FY12. CNG and PNG gas
sales volume increased 16.1% and 64.2% YoY to 242.7 mmscm and
71.1 mmscm, respectively, in Q3FY12. We expect 14.4% and 21.5%
increase in CNG and PNG sales volume, respectively, in FY13E.
ƒ Prices increased to pass on higher costs
The realisations improved YoY mainly on the back of the price
increases taken in the CNG segment. However, IGL was unable to
completely pass on higher costs to customers. CNG and PNG
realisations stood at | 31.7/kg and | 23.1/scm, respectively, for
Q3FY12. The impact of the price hike in the CNG segment to
| 33.75/kg would be visible from the current quarter.
V a l u a t i o n
We expect IGL to report steady growth on account of higher capex, an
increasing pipeline network and higher conversion to CNG vehicles. We
have valued the stock based on DCF methodology with a price target of
| 359 (WACC – 11.8%, terminal growth – 3%).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
R u p e e a n d h i g h e r c o s t s i m p a c t p r o f i t a b i l i t y …
Indraprastha Gas (IGL) declared its Q3FY12 results with revenues of
| 663.1 crore, EBITDA of | 150.4 crore and PAT of | 69.1 crore. The
profitability was lower than our estimates mainly on account of higher gas
costs due to higher LNG prices and stoppage of gas supplies from RIL.
Also, the depreciation of the rupee and inability of the company to pass
on higher costs to customers led to lower than expected profits.
However, we believe results would be better in Q4FY12 as IGL has now
increased CNG prices to | 33.75/kg and spot LNG prices have declined in
the global markets. In Q3FY12, blended sales prices were increased by
14.5% YoY to | 23.4/scm, mainly to pass on increased raw material costs.
The increased sales volumes in the CNG segment and natural gas sales
volume to industrial and commercial customers contributed to the 25.9%
YoY increase in volumes to 313.8 mmscm (3.4 mmscmd). We expect
IGL’s volumes to increase to 1220 mmscm and 1412 mmscm in FY12E
and FY13E, respectively. We recommend a HOLD rating on the stock with
a price target of | 359.
ƒ YoY increase of 25.9% in gas sales volume
IGL reported a 25.9% increase in gas sales volume from 249.2
mmscm in Q3FY11 to 313.8 mmscm in Q3FY12. CNG and PNG gas
sales volume increased 16.1% and 64.2% YoY to 242.7 mmscm and
71.1 mmscm, respectively, in Q3FY12. We expect 14.4% and 21.5%
increase in CNG and PNG sales volume, respectively, in FY13E.
ƒ Prices increased to pass on higher costs
The realisations improved YoY mainly on the back of the price
increases taken in the CNG segment. However, IGL was unable to
completely pass on higher costs to customers. CNG and PNG
realisations stood at | 31.7/kg and | 23.1/scm, respectively, for
Q3FY12. The impact of the price hike in the CNG segment to
| 33.75/kg would be visible from the current quarter.
V a l u a t i o n
We expect IGL to report steady growth on account of higher capex, an
increasing pipeline network and higher conversion to CNG vehicles. We
have valued the stock based on DCF methodology with a price target of
| 359 (WACC – 11.8%, terminal growth – 3%).
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