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Nirmal Bang Report
We have changed our earnings model and valuations for Indraprastha Gas Ltd. and Mahanagar Gas Ltd. based on:
1) 12% post-tax return on capital employed versus 14% previously for fixing network tariff for open access volumes, which we expect to touch 10%/15%20% over FY23E/24E/25E.
This calibrated increase is more realistic given the time required for the Petroleum and Natural Gas Regulatory Board to notify the geographical areas as common/contract carrier and third parties to build their distribution network, especially for compressed natural gas.
2. Discounted cash flow-based valuation using only open access/fixed tariff model versus our previous blended (weighted average of fixed tariff and unregulated model with 20%/80% weightage).
Hence, we have revised our valuations.
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