Indraprastha Gas - Q1FY14 Result Update
IGL’s net profit of Rs876mn was in line our estimate of Rs884mn. Net revenue for the quarter increased marginally by 2.2% qoq to Rs9bn as both volumes and realizations increased by 1.1%. CNG volumes for the quarter increased by 2.8% qoq to 191mnkg (yoy +4.4%) while realizations were constant during the quarter at Rs39.49/kg. PNG volume for the quarter decreased sequentially by 2.4% while realisations increased by 3.4%. Gas costs for the quarter increased at a slower pace of 0.7% qoq to Rs17.6/scm. Consequently, IGL’s gross margin for the quarter increased by 1.9% qoq to Rs9.04/scm (yoy +8.1%). EBITDA/scm for the quarter stood at Rs5.7 (yoy +2.7% qoq +3.1%) which was in line with our estimate of Rs5.72/scm.
We value IGL on DCF basis and arrive at a fair value of Rs339 per share. We have used WACC of 12.3% and terminal growth rate of 2% for DCF valuation. We maintain our BUY rating on the stock with a target price of Rs339. At the CMP, the stock is trading at 9.1x and 4.4x FY15e EPS and EBITDA respectively.
Actual v/s Estimates
| Y/E, Mar (Rs. m) |
Q1FY14
|
Q4FY13
|
qoq (%)
|
Q1FY13
|
yoy (%)
|
LKP Estimates
|
Deviation (%/bps)
|
| Revenue |
9,015
|
8,818
|
2.2%
|
7,602
|
18.6%
|
9,259
|
-2.6%
|
| EBITDA |
1,927
|
1,848
|
4.3%
|
1,793
|
7.5%
|
1,923
|
0.2%
|
| EBITDA (%) |
21.4%
|
21.0%
|
41 bps
|
23.6%
|
-221 bps
|
20.8%
|
60 bps
|
| PAT |
876
|
835
|
4.9%
|
850
|
3.0%
|
884
|
-1.0%
|
LKP Research
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