Analyst Corner: ‘Buy’ on Indraprastha Gas with TP of Rs 593

We met IGL’s new Managing Director, Mr A K Jana, as part of our CGD CEO e-Series Conference. IGL’s volumes are poised to accelerate structurally. The new MD believes recent open access regulation is favourable for CGD incumbents as well, which will sustain profitability. Highlights, volumes are poised to accelerate to a 10–15% CAGR over five years led by a doubling in domestic gas connections and ‘enhanced economics’ of CNG vehicles. IGL targets 2x CNG stations in five years. Recent open access regulation encourages new CGD buildout while restricting a pure change of hands. High barriers remain. IGL has the option to widen margins as CNG is about half the price of competing fuels. We are raising the TP by 4.9% to INR593; reiterate ‘Buy’.