Indraprastha Gas Limited (IGL) shares surged over 3% as global brokerage firm Jefferies reiterated its bullish stance on the stock. Jefferies has maintained a ‘Buy’ rating on IGL, setting a target price of ₹252 per share. As of 11:23 AM, the shares were trading 3.12% higher at Rs 199.95.
As per Jefferies, the recent decline of 30% in IGL’s stock since October has brought its valuation below the negative one standard deviation of its long-term forward price-to-earnings (PE) average. This sharp correction presents an attractive opportunity for investors seeking a favorable risk-reward ratio. The brokerage firm believes that IGL’s strong fundamentals and upcoming catalysts could drive a recovery in its stock price in the medium term.
Jefferies also noted that a key factor supporting this positive outlook is IGL’s interest in bidding for High Pressure, High Temperature (HPHT) gas from ONGC. This strategic move is expected to bolster the company’s margin defense while also aiding volume growth. Additionally, the expectation of a near-term price hike could further enhance profitability and stabilize earnings.
Despite the positive outlook, Jefferies cautions that a sudden reduction in Administered Pricing Mechanism (APM) gas allocation poses a potential downside risk. However, with strong valuation support, an expected increase in gas prices, and a focus on securing additional gas supply, the overall sentiment for IGL remains optimistic.
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