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IGL's Q3 FY12 net profit exceeded our expectations on the back of lower than
estimated gas cost in spite of a sharp rise in spot LNG prices and swift
depreciation of the rupee.
Q3 FY12 sales at 3.49 mmscmd, 3% ahead of estimate
The company sold 313.8 mmscm during the quarter comprising of 179.8 mn kg of
CNG and 71.1 mmscm of PNG. Total sales improved by 6.1 mmscm q-o-q & 64.6
mmscm y-o-y. CNG sales came in 5.3% ahead of our estimate, which resulted in
actual sales volumes being 3.2% ahead of our expectations. While CNG sales
were flat sequentially, PNG sales improved 4.3% sequentially.
Q3 FY12 EBITDA/scm at Rs 4.8/scm, 4% ahead of estimate
EBITDA/scm for Q3 FY12 came in at Rs 4.79/scm, compared to Rs 5.13/scm in Q2
FY12 & Rs 5.19/scm in Q3 FY11. This pressure on margins was due to increased
dependence on costlier spot R-LNG and was exacerbated by the swift
depreciation of the rupee. However, raw material cost at Rs 13.5/scm was 4%
lower than our estimate of Rs 14/scm, leading to better than expected
EBITDA/scm.
Revenue at Rs 6,631 mn, in line with estimates
Q3 FY12 revenue came in at Rs 6,631.3 mn, 1.4% ahead of our estimate. While
CNG sales of Rs 4,934.4 mn was 4.2% ahead of our estimate, PNG sales at Rs
1,638.8 mn disappointed by coming in 9.2% lower than expected. Sales
increased 45% y-o-y on account of higher sales volumes and price hikes.
Q-o-q growth of 11% was primarily due to the price hike in CNG on Oct 1,
2011.
Outlook & Valuation
We had initiated coverage on IGL in Oct 2011 with a contra-consensus SELL
call, citing risks to continuance of the past rosy growth & margin scenario.
Subsequently, the stock has corrected from Rs 426 at the time of our
initiation to as low as Rs 317. Subsequently, we had come up with an event
update wherein we upgraded our recommendation to a BUY with a target price
of Rs 366.
As rupee has appreciated by ~5.7% in Jan 2012 and spot LNG prices have come
down from ~$ 16/mmBtu to ~$14/mmBtu, we expect the coming quarters to be
significantly better. We roll forward our valuation to Mar 2013 and maintain
BUY with a revised target price of Rs 405 which translates into an upside of
~15% to the CMP of Rs 350.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IGL's Q3 FY12 net profit exceeded our expectations on the back of lower than
estimated gas cost in spite of a sharp rise in spot LNG prices and swift
depreciation of the rupee.
Q3 FY12 sales at 3.49 mmscmd, 3% ahead of estimate
The company sold 313.8 mmscm during the quarter comprising of 179.8 mn kg of
CNG and 71.1 mmscm of PNG. Total sales improved by 6.1 mmscm q-o-q & 64.6
mmscm y-o-y. CNG sales came in 5.3% ahead of our estimate, which resulted in
actual sales volumes being 3.2% ahead of our expectations. While CNG sales
were flat sequentially, PNG sales improved 4.3% sequentially.
Q3 FY12 EBITDA/scm at Rs 4.8/scm, 4% ahead of estimate
EBITDA/scm for Q3 FY12 came in at Rs 4.79/scm, compared to Rs 5.13/scm in Q2
FY12 & Rs 5.19/scm in Q3 FY11. This pressure on margins was due to increased
dependence on costlier spot R-LNG and was exacerbated by the swift
depreciation of the rupee. However, raw material cost at Rs 13.5/scm was 4%
lower than our estimate of Rs 14/scm, leading to better than expected
EBITDA/scm.
Revenue at Rs 6,631 mn, in line with estimates
Q3 FY12 revenue came in at Rs 6,631.3 mn, 1.4% ahead of our estimate. While
CNG sales of Rs 4,934.4 mn was 4.2% ahead of our estimate, PNG sales at Rs
1,638.8 mn disappointed by coming in 9.2% lower than expected. Sales
increased 45% y-o-y on account of higher sales volumes and price hikes.
Q-o-q growth of 11% was primarily due to the price hike in CNG on Oct 1,
2011.
Outlook & Valuation
We had initiated coverage on IGL in Oct 2011 with a contra-consensus SELL
call, citing risks to continuance of the past rosy growth & margin scenario.
Subsequently, the stock has corrected from Rs 426 at the time of our
initiation to as low as Rs 317. Subsequently, we had come up with an event
update wherein we upgraded our recommendation to a BUY with a target price
of Rs 366.
As rupee has appreciated by ~5.7% in Jan 2012 and spot LNG prices have come
down from ~$ 16/mmBtu to ~$14/mmBtu, we expect the coming quarters to be
significantly better. We roll forward our valuation to Mar 2013 and maintain
BUY with a revised target price of Rs 405 which translates into an upside of
~15% to the CMP of Rs 350.
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