IGL's domestic gas allocations to be increased by 31%; stock up 3%

Indraprastha Gas Ltd (IGL) on Thursday informed exchanges that its domestic gas allocations would be hiked by 31 per cent, starting from January 16, 2025. "As per the communication received from GAIL (India) Ltd (the nodal agency for domestic gas allocation), this is to inform that the domestic gas allocations to IGL have been revised upwards by 31 per cent with effect from January 16, 2025, increasing the share of domestic gas in CNG Segment from 37 per cent to 51 per cent," the company stated in a BSE filing.

IGL said it has also tied-up additional RLNG (Regasified Liquefied Natural Gas) volumes on a term basis at competitive prices, with one of the major suppliers (around 1.0 MMSCMD). It mentioned that the revision and signing of additional volumes would have a positive impact on the company's profitability.

On the stock-specific front, IGL settled 2.71 per cent higher at Rs 418.70. At this price, it has climbed 8.57 per cent in a month. The counter stock saw high trading volume on BSE today as around 8.69 lakh shares changed hands. The figure was higher than the two-week average volume of 2.20 lakh shares. Turnover on the stock came at Rs 37.08 crore, commanding a market capitalisation (m-cap) of Rs 29,606.53 crore.

The scrip traded lower than the 5-day, 100-, 150-day and 200-day simple moving averages (SMAs) but higher than the 10-day, 20-, 30-day and 50-day SMAs. The stock's 14-day relative strength index (RSI) came at 55.74. A level below 30 is defined as oversold while a value above 70 is considered overbought.

As per BSE, the company's stock has a price-to-equity (P/E) ratio of 18.42 against a price-to-book (P/B) value of 3.16. Earnings per share (EPS) stood at 22.96 with a return on equity (RoE) of 17.13. Promoters held a 45 per cent stake in the natural gas distributor.

"We anticipate IGL's Q3 FY25 EBITDA to fall by 51 per cent year-on-year (YoY) and 48 per cent QoQ (sequentially), due to sharp increase in raw material cost led by twin APM (Administered Pricing Mechanism) de-allocation during the quarter and lower than required price hikes to maintain margins," said Nuvama Institutional Equities.

"Margins are likely to fall primarily on raw material cost increase. 8 per cent YoY volume growth led by private vehicle registrations and expansion in new GAs, provides support to earnings. CNG prices were flat QoQ and YoY," the domestic brokerage added.