Con­sis­tent vol­ume growth fu­els In­draprastha Gas in De­cem­ber quar­ter


of IGL’S to­tal vol­ume, in­creased at 13%. Vol­ume growth was helped by higher con­ver­sion to CNG. The com­pany’s re­main­ing vol­umes come from piped nat­u­ral gas, or PNG, sales, which in­creased by about 10% in the quar­ter. Within the PNG seg­ment, in­dus­trial and com­mer­cial vol­umes grew at a rel­a­tively faster pace.

IGL’S Ebitda per stan­dard cu­bic me­tre (scm) for the De­cem­ber quar­ter in­creased by about 8% to ₹5.9. Ebitda is earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­za­tion. Over­all, net profit in­creased 19% year-onyear to ₹198 crore.

The good news is that the com­pany’s vol­ume out­look re­mains de­cent. “With 40 new CNG sta­tions ev­ery year and low PNG pen­e­tra­tion, we be­lieve IGL has a ro­bust growth pipe­line in ex­ist­ing ge­ogra­phies,” said an­a­lysts from Edel­weiss Se­cu­ri­ties Ltd in a re­port on 6 Fe­bru­ary.

IGL’S new ge­ogra­phies— Re­wari (0.2 mscmd), Haryana (0.5 mscmd) and Kar­nal (0.2 mscmd)—will also aug­ment vol­umes over the en­su­ing four–five years, added the an­a­lysts. Mscmd is mil­lion scm per day.

High pol­lu­tion lev­els re­main a worry for Delhi, how­ever, IGL has gained from this prob­lem. In a re­cent re­port, Jef­feries In­dia Pvt. Ltd notes that higher pol­lu­tion lev­els in the city could con­tinue to help IGL ben­e­fit from stronger pol­icy tail­winds vis-àvis Ma­hana­gar Gas Ltd. Delhi’s PM10 stands at over 2.2 times that of Mum­bai. PM10 mea­sures air qual­ity trends for par­ti­cle pol­lu­tion and refers to in­hal­able par­ti­cles, with di­am­e­ters that are gen­er­ally 10 mi­crome­tres or smaller. Ma­hana­gar Gas is IGL’S peer based in Mum­bai.

What of the IGL stock? For in­vestors, 2019 has brought some cheer. The stock has risen 7.1% so far, sug­gest­ing that some of the op­ti­mism was fac­tored in the price. Val­u­a­tions aren’t par­tic­u­larly cheap though. The stock trades at 21 times es­ti­mated earn­ings for the next fis­cal year, ac­cord­ing to Bloomberg data. How­ever, con­sis­tent vol­ume growth can lend sup­port to IGL’S val­u­a­tions.

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