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R e g u l a t o r y b o a r d c u t s t a r i f f s …
The Petroleum and Natural Gas Regulatory Board (PNGRB) has fixed the
network tariff rate and compression charge for Indraprastha Gas (IGL).
The network tariff has been fixed at | 38.6 per mmbtu against | 104.1 per
mmbtu submitted by IGL while the compression charge has been fixed at
| 2.75 per kg against | 6.66 per kg submitted by IGL, with retrospective
effect. This PNGRB directive will lead to a reduction in IGL’s selling price.
However, an increase in marketing margins could partially offset the
negative impact caused by these tariff revisions. This order of PNGRB will
have an adverse impact on the company. We are awaiting management
comments on this issue and recommend investors stay away from the
stock till further clarity arrives.
Lower tariffs, compression charges to substantially impact EPS
The reduction in network tariff rate and compression charges for IGL
would have a substantial impact on the earnings of the company. PNGRB
has lowered IGL’s network tariff rate and compression charges, both of
which were originally fixed by the company. IGL charged a network tariff
of | 104.05 per mmbtu and levied compression charges at | 6.66 per kg
for CNG. PNGRB has fixed the tariff and compression rate at | 38.58 per
mmbtu and | 2.75 per kg, thus bringing them down by 63% and 58.7%,
respectively. We are awaiting clarity from the management on PNGRB’s
order. If the order is implemented in its current form, its CNG selling price
would reduce by | 7 per kg to | 28.4 per kg from the current price of
| 35.5 per kg while its EPS would decline to | 9.2 in FY13E. However, the
increase in marketing margins could partially offset the negative impact
caused by these tariff revisions. We recommend that investors stay away
from the stock till further clarity emerges
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
R e g u l a t o r y b o a r d c u t s t a r i f f s …
The Petroleum and Natural Gas Regulatory Board (PNGRB) has fixed the
network tariff rate and compression charge for Indraprastha Gas (IGL).
The network tariff has been fixed at | 38.6 per mmbtu against | 104.1 per
mmbtu submitted by IGL while the compression charge has been fixed at
| 2.75 per kg against | 6.66 per kg submitted by IGL, with retrospective
effect. This PNGRB directive will lead to a reduction in IGL’s selling price.
However, an increase in marketing margins could partially offset the
negative impact caused by these tariff revisions. This order of PNGRB will
have an adverse impact on the company. We are awaiting management
comments on this issue and recommend investors stay away from the
stock till further clarity arrives.
Lower tariffs, compression charges to substantially impact EPS
The reduction in network tariff rate and compression charges for IGL
would have a substantial impact on the earnings of the company. PNGRB
has lowered IGL’s network tariff rate and compression charges, both of
which were originally fixed by the company. IGL charged a network tariff
of | 104.05 per mmbtu and levied compression charges at | 6.66 per kg
for CNG. PNGRB has fixed the tariff and compression rate at | 38.58 per
mmbtu and | 2.75 per kg, thus bringing them down by 63% and 58.7%,
respectively. We are awaiting clarity from the management on PNGRB’s
order. If the order is implemented in its current form, its CNG selling price
would reduce by | 7 per kg to | 28.4 per kg from the current price of
| 35.5 per kg while its EPS would decline to | 9.2 in FY13E. However, the
increase in marketing margins could partially offset the negative impact
caused by these tariff revisions. We recommend that investors stay away
from the stock till further clarity emerges
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