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Brokerages turn bullish on IGL stock, here’s why

June 29, 2021 04:16 PM

Brokerages turn bullish on IGL stock, here's why
Brokerages turn bullish on IGL stock; HDFC Securities has a 'Buy' rating with a target price of Rs 603 per share. The recommendation is premised

Brokerages turn bullish on IGL stock; Share of Indraprastha Gas Limited (IGL) rose 6 per cent to hit an intraday high of Rs 544.85 on BSE as brokerages maintained their bullish stance on the stock post announcement of March quarter earnings.

It has gained 21 per cent in the last 12 months and risen 6 per cent since the beginning of this year. Share of IGL stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200 day moving averages.

The company reported a net profit of Rs 331 crore for the quarter ended March 2021 against Rs 334.87 crore in the quarter ended December 2020. Revenue from operations grew 7.22 per cent to Rs 1,710.32 crore against Rs 1,595.09 crore (QoQ).

Brokerages turn bullish on IGL stock; HDFC Securities has a ‘Buy’ rating with a target price of Rs 603 per share. The recommendation is premised on robust volume growth, led by its quasi-monopolistic position in Delhi with regulatory support in the form of prioritised gas allocation and a portfolio of mature, semi-mature and new geographical areas.

“4QFY21 EBITDA/APAT were 2/2% below our estimates, owing to higher-than-expected gas cost and lower-than expected other income, partially offset by lower-than-expected other expenses,” the brokerage house added.

Also Read: Indraprastha Gas share rises over 6% post strong Q4 earnings

CLSA has upgraded the stock to ‘Buy’ as it finds the PSU a good re-opening play with a rebound in mobility. It has a target price of Rs 630 per share. The brokerage firm added that the recent underperformance to MGL, Gujarat Gas provides a good entry point.

Nomura sees upside risks to FY22-23 earnings but the brokerage also expects city  gas companies to pass the bulk of sharp domestic gas price hike in the second half of the FY22. The brokerage house has a ‘Buy’ call on the stock with a target price of Rs 650 per share.

“We lower our FY22-23 earnings estimate by 8.7/5.6 percent to factor in lower volume assumption even as we increase our margins. FY21 was a difficult year for IGL as pandemic restrictions on vehicle movement hit CNG volumes. However, easing of restrictions along with rising vaccination coverage will limit the incidence of lockdown.

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