Due to recovery in margins and volume, a rise in net profit is likely to be witnessed by Indraprastha Gas Limited (IGL) for the April-June quarter on a quarter-on-quarter basis (QoQ). The leading city gas distributor’s profit after tax (PAT) is likely to rise 59 per cent sequentially on improved earnings before interest, taxes, depreciation, and amortization (EBITDA) margins in the first quarter quarter of current fiscal, according to a report by JM Financial Services.
According to JM Financials, gas company’s margins and volumes are also likely to report a steady growth in the quarter-under-review due to reduction in administrative price mechanism (APM) gas prices.
The brokerage in its report said,‘’EBITDA margin is likely to improved in the April-June quarter as IGL retained benefit to the extent of around ₹3/scm (standard cubic meter) on account of reduction in APM gas price to $6.5/mmbtu (from ₹8.57/mmbtu in 2HFY23) after the adoption of Kirit Parikh committee’s recommendations,”
According to JM Financials, the gas distributer’s volume could rise 2.6 per cent QoQ due to expected pick-up in compressed natural gas (CNG) conversion post the reduction in CNG price in early Apr’23 and 1 more day in 1QFY24.
At a target price of ₹570, JM Financials has reiterated a ‘buy’ rating of IGL’s stock. ‘’With APM gas price being capped at $6.5/mmbtu and moderation in spot LNG prices, we reiterate ‘BUY’ on IGL,” said the brokerage house.
In the preceding January-March quarter of fiscal 2022-23, IGL reported a net profit of ₹329.13 crore – a decline of eight per cent compared to ₹363.08 crore in the corresponding period last year. At ₹3,687.2 crore, the company’s revenue from operations registered a sharp increase of 53 per cent in the January-March quarter, compared to ₹3,711 crore in the year-ago period.
IGL’s board has not recommended a final dividend for fiscal year 2022-23, as the two interim dividends, first being of 150 per cent and the second of 500 per cent had already been declared by the company for FY23.
Earlier this year, IGL announced that it had reduced the prices of CNG and piped natural gas (PNG) by up to ₹6 in Delhi, marking the first price reduction in two years.
“The revised retail price of CNG in Delhi would be ₹73.59 per kg w.e.f. 6 am on 9th April 2023.” The revised retail price of CNG in Noida, Greater Noida, and Ghaziabad will be ₹77.20 per kg, and ₹82.62 per kg in Gurugram.
The price of gas piped to household kitchens or PNG had also been reduced to ₹48.59 per scm from ₹53.59 per scm. This followed an over 80 per cent increase in prices over the past two years, providing a much-needed relief to consumers.
IGL also announced the signing of joint venture agreement in the ratio of 51:49 with Genesis Gas Solutions Private Limited (Genesis).
IGL in its statement stated,‘’In this regard, this is to inform that, an email has been received from Ministry of Corporate Affairs regarding incorporation of Company IGL Genesis Technologies Limited, a Joint Venture between IGL and Genesis having the equity participation from both the partners in the ratio of 51 :49 respectively.”
The company is set to announce its April-June quarter results for FY24 on Sunday, July 23.
On July 22, shares of IGL settled 0.86 per cent higher at ₹495.10 apiece on the BSE.
