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IGL share price closes 5% lower post Q4 earnings

BusinessToday.In     June 18, 2020

Indraprastha Gas Ltd (IGL) share price closed lower after the firm announced a 12 per cent rise in March quarter net profit due to higher gas sales. Share price of IGL ended 5.44% to Rs 448 against previous close of Rs 473.90 on BSE. IGL stock has fallen after 2 days of consecutive gain. The large cap stock trades higher than 200 day moving averages but lower than 5 day, 20 day, 50 day and 100 day moving averages.

IGL share has gained 32.26% during last one year and risen 5% since the beginning of this year.

Market cap of the clean energy firm stood at Rs 32,165 crore. Total 3.21 lakh shares changed hands amounting to turnover of Rs 14.60 crore. The large cap stock hit 52 week high of Rs 534.40 on February 7, 2020 and 52 week low of Rs 284.55 on March 19, 2020. The firm that supplies CNG to automobiles and piped cooking gas to household kitchens in national capital and adjoining towns, reported net profit of Rs 252.63 crore in January-March quarter compared with Rs 224.72 crore in the same period a year ago.

Overall sales volume climbed to 567 million standard cubic metres in Q4 of 2019-20 from 564 mmscm a year back. Turnover was marginally higher at Rs 1,697 crore. Company's gross turnover rose to Rs 7,131 crore in FY20 from Rs 6,337 crore in FY19, showing an increase of 13 per cent. However, net profit in FY20 rose 44 per cent to Rs 1,135 crore from Rs 786 crore in FY19, driven by higher volumes and reduction in corporate tax rates.

During 2019-20, total sales volume grew by 9 per cent over the previous year, with CNG recording 7 per cent growth in volumes and piped natural gas posting volume growth of 12 per cent. IGL is a joint venture of GAIL, BPCL and Delhi government. It is the largest CNG distribution company of the country, with operations in Delhi, Noida, Greater Noida, Ghaziabad, Muzaffarnagar, Rewari, Gurugram and Karnal.

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CLSA said EBITDA in Q4 was beaten by 4% as lower volume was more than offset by better margins. Volume normalisation may happen only by end-2020 but a 50% cut in domestic gas price and inclusion of gas in GST are tailwinds. It cut target price to Rs 525 from Rs 570.

Jefferies said the firm reported robust 4Q with volumes 11% ahead of the brokerage's estimates. Margins were in line with expectations. Jefferies expects normal volumes from 3QFY21. The stock is trading at 22 times FY22E P/E. Both recovery in volumes and expansion in margins look to be priced in the performance. It gave hold call with a target price of Rs 450.

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