Indraprastha Gas (IGL)

Basis of our Recommendation

Indraprastha Gas Limited (IGL) is currently navigating a challenging landscape marked by elevated gas costs stemming from geopolitical tensions, which have led to a downward revision in near-term earnings expectations. Management has indicated a robust growth trajectory, with a projected volume increase exceeding 10%, particularly in new geographical areas and vehicle conversions. However, margins are under pressure, necessitating strategic price hikes and regulatory support for infrastructure expansion to achieve long-term margin recovery targets. Vista's financial outlook reflects stable revenue growth consistent with historical performance, although margins are expected to remain constrained. The company's conservative balance sheet supports its growth initiatives, yet competitive pressures and reliance on LPG imports pose significant headwinds. The macro environment in India remains cautiously optimistic, with improving growth indicators, but inflationary pressures from rising crude oil prices could impact consumer sentiment. Over the next 12-24 months, key opportunities include the expansion of LNG and continued penetration into industrial sectors, while watchpoints include the impact of the Delhi EV policy on the three-wheeler segment and ongoing margin pressures from gas costs