Target: ₹220
CMP: ₹154.80
Indraprastha Gas Limited (IGL) reported an EBITDA per SCM of ₹4.8 for Q4 FY26, surpassing estimates by 44%. In this quarter, gas costs and operational expenditure rose by approximately ₹1 and ₹0.8 per SCM, respectively. The total gas volumes reached 9.69 mmscmd, marking a year-on-year increase of 6%, but falling slightly short of projections. Consequently, EBITDA was reported at ₹420 crore, exceeding forecasts by 51%, despite a 15% decline year-on-year. The Profit After Tax (PAT) for IGL was ₹280 crore, beating estimates by 44% and reflecting a 21% decrease compared to the previous year.
CNG volumes experienced year-on-year growth of 5.5%. Management has indicated plans for a strong Q1 FY27, aiming for an exit volume of 10.6 mmscmd, driven by expected CNG volume growth of 10-13% and projected EBITDA margins of ₹7-8 per SCM. To date, IGL has connected a total of 3.44 million Domestic PNG (D-PNG) customers, with 2.45 million currently billed. Under the PNG Drive 2.0 initiative, the company plans to add 350,000 new billed domestic connections in FY27, backed by a robust pipeline of approximately 500,000 already connected but not consuming customers.
Management noted that gas procurement costs have risen by about 25% compared to pre-geopolitical crisis levels, with Q3 FY26 gas costs reported at ₹35.8 per SCM. To counteract margin pressures, IGL has implemented a ₹3 per kg price increase for CNG. However, it is anticipated that volumes may remain subdued in Q1 FY27.
The company is valued at 15 times the projected December 2027 earnings per share, with an additional ₹43 per share attributed to joint ventures, resulting in a target price of ₹220. With a 2% dividend yield for FY27 and an expected 18% CAGR in earnings per share from FY26 to FY28, the company’s valuation is considered appealing. The recommendation remains a Buy.
Published on May 20, 2026
