Motilal Oswal: Indraprastha Gas - Looking For The Right Tilt Between Risk And Rewards 
An employee refuels a vehicle with compressed natural gas at an Indraprastha Gas Ltd. gas station in Delhi. (Photographer: Prashanth Vishwanathan/Bloomberg)

Motilal Oswal: Indraprastha Gas - Looking For The Right Tilt Between Risk And Rewards 

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Motilal Oswal Report

We hosted senior management of Indraprastha Gas Ltd. for a non-deal roadshow.

Between double digit growth for next four to five years and upcoming regulation on open access, finding the right tilt between reward and risk is a challenge. Key highlights below -

As only essential service providers were allowed to operate over April–May during the Covid-19 led lockdown, Indraprastha Gas witnessed two months of poor volumes.

Although, recovery was better than expected from June. Compressed natural gas volumes are currently at 85–90% of normal levels.

However, the company expects volumes to normalize by the end of Q4 FY21. Our model assumptions were in line with management commentary.

We have built-in 70%/85% of pre-Covid volumes for Q2/Q3 FY21 and normalization for Q4 FY21.

Maharashtra Natural Gas Ltd. (MNGL) and Central U.P. Gas Ltd. (CUGL) have seen volume impact at levels similar to Indraprastha Gas.

CUGL (Kanpur) has seen better recovery, while MNGL (Pune) has been drastically impacted due to extended lockdown; thus, expect a lag of one to two months in recovery in MNGL versus Indraprastha Gas.

Click on the attachment to read the full report:

Motilal Oswal Indraprastha Gas Company Update.pdf


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