Indraprastha Gas Q3 Results: Net Profit Rises Even As Volumes Drop; Shares Rise

Indraprastha Gas Ltd.’s profit rose in the third quarter even as volumes declined.

Net profit of the city gas distributor rose 18% over the year earlier to Rs 334.9 crore in the three months ended December, according to an exchange filing. That compares with the Rs 327.7-crore consensus estimate of analysts tracked by Bloomberg.

Its net sales fell 13% to Rs 1,446.1 crore, against the Rs 1,500.3-crore forecast. Overall volumes declined 6% year-on-year to 6.26 mmscmd, while CNG volumes fell 9% to 412 million scm.

The company expects FY21 volumes to average around 5.1-5.2 mmscmd, and to exceed 7 mmscmd in FY22. It anticipates 11-12% overall volume growth in FY23.

Q3 Results: Other Highlights (Year-On-Year)

• Operating profit or Ebitda rose 28% to Rs 500.6 crore, compared with the estimated Rs 459.8 crore.

• Ebitda margin expanded more than 1,100 basis points to 34.6%.

“Ebitda per SCM guidance now stands at Rs 8.5 as pricing power is steady due to rising crude oil and alternate fuel prices and other CGD (city gas distributors) players also raising their margins,” Emkay Global said in a post-earnings note.

According to Motilal Oswal, introduction of electric vehicles may impact CNG demand over the long term. “High leverage to CNG may pose a threat to long-term volume growth,” the brokerage said in a separate post-earnings note. “IGL can increase its sales volumes from new areas such as Rewari, Karnal and Muzaffarnagar and the newly-awarded cities in the tenth round.”

Shares of Indraprastha Gas rose as much a 3.2% to Rs 575 apiece, compared with the 0.3% drop in the NSE Nifty 50 index. Of the 37 analysts tracking the stock, 23 have a ‘buy’ rating, while seven each suggest a ‘hold’ and a ‘sell’, according to Bloomberg data.