Indraprastha Gas (IGL) Q3 earnings were in line with its estimate as disappointment on margin was offset by better volume growth, said the company.
“We believe both margin and volume growth has peaked for IGL. EBITDA margin has come off over the last 2 quarters despite benign domestic gas price – we expect gas price to rise from H2FY18,” it said. Volume growth of 10 per cent + in 9M FY17 may also moderate going forward given slower pump addition, start of Delhi Metro Phase 3 and reasonably high CNG penetration. IGL’s Q3 EBITDA and net profit were in line with the estimate. CNG volume growth of 11 per cent surprised positively against the company’s estimate of 7 per cent as demonetisation impact was lower.
However, EBITDA margin of Rs 5.7/scm was disappointing against an estimate of Rs 6.2/scm despite a domestic gas price cut in beginning of October. Performance of the associates (CUGL and MNGL) remained strong as the two contributed Rs 180 million (Rs 1.3/share) to consolidated net profits in the quarter.
After peaking at Rs 6.5/scm in Q1, IGL’s margins have come off over the last two quarters despite benign domestic gas prices. Based on the global indices on which it is based, the company expects domestic gas price to remain flat in the upcoming revision on April 1 but rise sharply in the next revision on October 1. As a result, the company expects FY18/19E EBITDA margins to be slightly below FY17E level.
“We believe both margin and volume growth has peaked for IGL. EBITDA margin has come off over the last 2 quarters despite benign domestic gas price – we expect gas price to rise from H2FY18,” it said. Volume growth of 10 per cent + in 9M FY17 may also moderate going forward given slower pump addition, start of Delhi Metro Phase 3 and reasonably high CNG penetration. IGL’s Q3 EBITDA and net profit were in line with the estimate. CNG volume growth of 11 per cent surprised positively against the company’s estimate of 7 per cent as demonetisation impact was lower.
However, EBITDA margin of Rs 5.7/scm was disappointing against an estimate of Rs 6.2/scm despite a domestic gas price cut in beginning of October. Performance of the associates (CUGL and MNGL) remained strong as the two contributed Rs 180 million (Rs 1.3/share) to consolidated net profits in the quarter.
After peaking at Rs 6.5/scm in Q1, IGL’s margins have come off over the last two quarters despite benign domestic gas prices. Based on the global indices on which it is based, the company expects domestic gas price to remain flat in the upcoming revision on April 1 but rise sharply in the next revision on October 1. As a result, the company expects FY18/19E EBITDA margins to be slightly below FY17E level.
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