Results better than estimates
IGL’s net profit of Rs928mn was ahead of our estimate of Rs848mn driven higher realisations and volumes both in CNG and PNG segments. Net revenue for the quarter increased by 11.9% qoq to Rs10.09bn as both volumes and realizations increased by 4.6% and 7.1% respectively. CNG volumes for the quarter increased by 4.7% qoq to 198.7mnkg (yoy +2.3%) while realizations increased by 6.6% qoq to Rs42.38/kg. PNG volume for the quarter increased sequentially by 4.1% while realisations increased by 8.3%. Gas cost for the quarter increased by 11.2% qoq to Rs19.6/scm. Consequently, IGL’s gross margin for the quarter decreased by 1% qoq to Rs8.95/scm (yoy -1.4%). EBITDA/scm for the quarter stood at Rs5.66 (yoy -6.7% qoq -0.7%) which was higher than our estimate of Rs5.66/scm.
Valuation and view
We value IGL on DCF basis and arrive at a fair value of Rs333 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 revised target price of Rs333. At the CMP, the stock is trading at 9x and 4.4x FY15e EPS and EBITDA respectively.
Actual v/s Estimates
Y/E, Mar (Rs. m)
|
Q2FY14
|
Q1FY14
|
qoq (%)
|
Q2FY13
|
yoy (%)
|
LKP Estimates
|
Deviation (%/bps)
|
Revenue
|
10,090
|
9,015
|
11.9%
|
8,546
|
18.1%
|
9,285
|
8.7%
|
EBITDA
|
2,001
|
1,927
|
3.9%
|
2,060
|
-2.9%
|
1,885
|
6.1%
|
EBITDA (%)
|
19.8%
|
21.4%
|
-154 bps
|
24.1%
|
-427 bps
|
20.3%
|
-47 bps
|
PAT
|
928
|
876
|
5.9%
|
992
|
-6.5%
|
848
|
9.3%
|