Indraprastha Gas Ltd (IGL) reported net sales of Rs8,687mn, much below our estimates for Q1 FY15.
Net sales at Rs8.7bn were lower than estimates owing to weaker than expected CNG realizations
CNG volumes at 194mn kgs were higher by 1.6% yoy and 1.4% qoq. PNG volumes were at 83scm a fall of 3.5% yoy and 9.1% qoq
Gross margins/unit increased by 6.4% yoy and 14.9% qoq to Rs11.8/unit. This was better than our expectations owing to decline in LNG prices and hike in CNG prices
OPM at 24% came in higher than our expectations and was higher by 250bps yoy and 413bps qoq, margins were highest since Q2 FY13
Maintain BUY with a revised price target of Rs446
(Rs m) | Q1 FY15 | Q1 FY14 | % yoy | Q4 FY14 | % qoq |
Net sales | 8,687 | 9,027 | (3.8) | 9,681 | (10.3) |
Material costs | (5,420) | (5,955) | (9.0) | (6,780) | (20.1) |
Personnel costs | (162) | (147) | 10.3 | (145) | 11.8 |
Other overheads | (1,022) | (986) | 3.6 | (834) | 22.6 |
Operating profit | 2,084 | 1,939 | 7.4 | 1,922 | 8.4 |
OPM (%) | 24.0 | 21.5 | 250 bps | 19.9 | 413 bps |
Depreciation | (368) | (532) | (30.7) | (558) | (33.9) |
Interest | (91) | (128) | (28.7) | (96) | (5.2) |
Other income | 78 | 38 | 103.9 | 64 | 20.8 |
PBT | 1,702 | 1,318 | 29.1 | 1,332 | 27.7 |
Tax | (561) | (442) | 27.0 | (427) | 31.4 |
Effective tax rate (%) | 33.0 | 33.5 | 32.1 | ||
Adjusted PAT | 1,140 | 876 | 30.2 | 905 | 26.0 |
Adj. PAT margin (%) | 13.1 | 9.7 | 342 bps | 9.3 | 378 bps |
Ann. EPS (Rs) | 32.6 | 25.0 | 30.2 | 25.9 | 26.0 |
Revenues lower than expected
Indraprastha Gas Ltd (IGL) reported net sales of Rs8,687mn, much below our estimates for Q1 FY15. The revenues were lower by a 3.8% yoy and 10.3% qo. CNG volumes at 194mn kgs were higher by 1.6% yoy and 1.4% qoq. PNG volumes were at 83scm a fall of 3.5% yoy and 9.1% qoq. CNG realizations were at Rs36.4/kg a fall of 7.7% yoy and 10.8% qoq owing to price cuts implemented in the month of February 2014. PNG prices were higher by 6.9% yoy but were lower by 3.1% qoq. While CNG volumes were in line with expectations realizations were lower than estimates. PNG volumes were lower than projected while realizations also were below estimates.
Strong operational performance
OPM at 24% came in much higher than our expectations and was higher by 250bps yoy and 413bps qoq. The improvement in OPM was possible on the back of lower 358bps yoy and 765bps qoq improvement in gross margins. Gross margins/scm improved by 6.4% yoy and 14.9% qoq to Rs11.8/scm. However, these gains were offset by increase in staff costs and overheads owing to operating deleverage. Higher than expected gross margins were on the back of 1) lower LNG prices and 2) proactive increase in CNG prices.
Depreciation was seen lower by 30.7% yoy and 33.9% qoq owing to implementation of the provisions under the Companies Act 2013. While interest costs were lower by 28.7% yoy, other income more than doubled. Resultantly, PAT was recorded at Rs1,140mn, implying a growth of 30.2% yoy and 26% qoq. This was much higher than our estimates of Rs902mn.
As a % of net sales | Q1 FY15 | Q1 FY14 | bps yoy | Q4 FY14 | bps qoq |
Material costs | 62.4 | 66.0 | (358) | 70.0 | (765) |
Personnel Costs | 1.9 | 1.6 | 24 | 1.5 | 37 |
Other overheads | 11.8 | 10.9 | 84 | 8.6 | 316 |
Total costs | 76.0 | 78.5 | (250) | 80.1 | (413) |
Maintain BUY with a revised price target of Rs446
The pending Supreme Court verdict on the case filed by PNGRB regarding compression and marketing charge levied by the company continues to concern the markets. While charges were a concern, larger issue was a possibility of retrospective implementation. The probability of retrospective implementation, we believe, is now minimal. Furthermore, the new Government, considering their state wide implementation of city gas projects in Gujarat, is expected to lay stress on CGD projects across the country. IGL is trading at a P/E of 10.8x FY16E EPS of Rs35.7 much below its historical average. We maintain our BUY rating with a revised price target of Rs446.
Y/e 31 Mar (Rs m) | FY13 | FY14 | FY15E | FY16E |
Revenues | 33,670 | 39,222 | 44,503 | 52,420 |
yoy growth (%) | 33.7 | 16.5 | 13.5 | 17.8 |
Operating profit | 7,581 | 7,824 | 9,047 | 9,874 |
OPM (%) | 22.5 | 19.9 | 20.3 | 18.8 |
Pre-exceptional PAT | 3,541 | 3,603 | 4,648 | 4,999 |
Reported PAT | 3,541 | 3,603 | 4,648 | 4,999 |
yoy growth (%) | 15.6 | 1.7 | 29.0 | 7.6 |
EPS (Rs) | 25.3 | 25.7 | 33.2 | 35.7 |
P/E (x) | 15.2 | 15.0 | 11.6 | 10.8 |
Price/Book (x) | 3.6 | 3.1 | 2.5 | 2.1 |
EV/EBITDA (x) | 7.6 | 7.0 | 6.0 | 5.2 |
Debt/Equity (x) | 0.3 | 0.2 | 0.2 | 0.1 |
RoE (%) | 26.0 | 22.1 | 23.9 | 21.5 |
RoCE (%) | 30.2 | 27.7 | 30.9 | 28.7 |
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
Aug 08, 2022
The laws of the financial world are different from the physical world. You can have prolonged periods of time, when sanity takes a back seat and excesses happen.
R. Venkataraman Aug 20, 2021
Retail trading or day trading has exploded because of falling brokerage rates, democratization of information, higher transparency and mobile platforms.
R. Venkataraman Jun 15, 2021
My simple message for dear readers is, if you don’t have any desperate need for funds, then don’t do anything.
R. Venkataraman May 12, 2021
The blow up of a US hedge fund has resulted in WhatsApp university offering many courses on what went wrong with Bill Hwang and Archegos.
R. Venkataraman Apr 09, 2021
The expensive valuations have been sustained by strong rebound in corporate earnings which led to ~8% upgrade in FY22 Nifty EPS since October 2020.
R. Venkataraman Mar 26, 2021
We believe the interest rates are likely to have bottomed due to inflationary pressure, large government borrowings and normalizing credit growth. Hence rate sensitive sectors should be avoided in our view.
R. Venkataraman Feb 17, 2021
As markets make new highs, one gets more emails and messages, which highlight the accomplishments of traders who have found a formula for making money.
R. Venkataraman Jan 27, 2021
Data does not seem to convincingly prove that short periods of high returns are always followed by meagre returns. Only in 4 instances, we had negative returns in the subsequent year.
R. Venkataraman Jan 01, 2021
Since September end, Bankex is up 16% with large banks like ICICI Bank, Bandhan up 20-27%, Housing Finance Companies like Repco, LICHF, PNB Housing are up 50%-100% from their six-month lows.
R. Venkataraman Oct 13, 2020
Morgan Housel’s 'The Psychology of Money' explains in detail the role of human biases in investment decisions.
R. Venkataraman Sep 26, 2020
Per Order for ETF & Mutual Funds Brokerage
Per Order for Delivery, Intraday, F&O, Currency & Commodity