Indraprastha Gas
Reco price: Rs 162
Current market price: 157.45
Target price: Rs 193
Upside: 22.6%
Brokerage: Edelweiss Securities
Indraprastha Gas (IGL) had its best-ever quarter, posting an EPS of Rs 4.1 in September 2009 quarter due to continued volume growth and high CNG realisations on account of increase in prices. A decline in other income, mild rise in gas costs and increased cash costs only partially offset the positives. CNG volumes, at 134.4 million (mln) kg, grew 14.7 per cent y-o-y and 11.5 per cent over June 2009 quarter due to strong demand from CNG buses, which are continuously being added to the Delhi fleet in the wake of Commonwealth Games. IGL added six CNG stations in the quarter, taking the total number to 187.
The stock has rallied in the quarter on account of the positive regulatory news and Commonwealth Games-led volume growth being factored in. Edelweiss has marginally reduced its earnings projections (4-5 per cent) in line with increased costs. At Rs 162, IGL is trading at 10.8 times its EPS and 2.8 times price to book value based on 2009-10 estimates, as against the fair value of Rs 193.
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