The problem with Indraprastha Gas Ltd’s (IGL’s) stock is that its valuations are relatively high. Shares of the city gas distributor trade at about 22 times estimated earnings for financial year 2022, according to Bloomberg data. The same measure for its smaller peer—Mahanagar Gas Ltd (MGL)—stands at around 13 times.
Investors are willing to assign high multiples to IGL’s robust volume performance. As it turns out, IGL’s volumes in the fourth quarter took a beating owing to the covid-19 lockdown, which was imposed on 25 March. Moreover, volumes are likely to remain subdued in the near future as well.
Post March quarter earnings, IGL’s shares lost 5% on Thursday. During the last quarter, sales volume declined 1% year-on-year.
