Karvy Stock Broking has maintained its buy rating on Indraprastha Gas with a target price of Rs 155 in its March 13, 2009 research report.
“IGL’s Q3FY2009 results were depressed due to the provision of Rs 175 million made for a disputed demand from the gas supplier, which might have adversely affected the stock price performance. However, the future
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growthprospects for IGL appears bright driven by increased conversion of private four-wheelers to CNG, acceleration in the conversion of light commercial vehicles (LCVs) to CNG and a sustained growth in piped natural gas (PNG) customers.
At current levels of Rs 101, the stock quotes at a P/E of 6.7x FY2010E EPS of Rs 15.1 and 2.8x EV/EBIDTA of FY2010E. We continue to value the stock based on one year forward EV/EBIDTA multiple of 5x with target price of Rs 155. We believe that the 5x multiple captures the concerns over the sustainability of margins,” says Karvy Stock Broking’s research report.
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