IGL Share Price Target: Why IGL Is Still A Strong BUY Despite Rupee Slide? Rs 248 Target Intact

At a time when the Indian rupee is close to its lowest point in relation to the US dollar, Indraprastha Gas Limited (IGL) has provided a comforting update. The company's margins are significantly safeguarded despite currency fluctuation since the impact of the depreciation of the INR has been well mitigated by falling global LNG prices. IGL is well-positioned to maintain profitability with only a slight increase in gas costs across sectors and a reasonable price-hike requirement even if the rupee continues to decline.

Analysts of HDFC Securities continue to retain a BUY recommendation on Indraprastha Gas with a revised target price of Rs 248, supported by consistent volume growth, robust gas allocation, and expansion into new geographical regions.

"We have analyzed the potential impact of the INR reaching its lowest level against the USD on Indraprastha Gas (IGL) and the price hike needed to offset any further depreciation. IGL's blended gas cost during the current quarter has come off on the back of reduced RLNG price in the international markets. Reduction in cost should offset the impact of current INR depreciation, leading to a negligible impact on IGL's per unit gross profit," commented the research analysts of HDFC Securities Limited (HSL).

"However, if the blended gas cost remains at the current levels, every two-rupee depreciation of INR against USD will necessitate a price hike of INR 1.38/kg for the CNG segment and INR 0.52/scm for the DPNG segment, which in our opinion should not be a challenge for IGL. We maintain our BUY recommendation on IGL with a target price of INR 248, given (1) volume growth at ~7% CAGR over FY25-33E; (2) robust margins supported by higher gas allocation from the high-pressure, high-temperature (HPHT) fields to the priority sector; and (3) a strong portfolio of new geographical areas (GAs) ensuring volume growth visibility," they further added.

3 Key Triggers

These three key triggers, according to HDFC Securities' research experts, reinforce the ongoing BUY outlook by bolstering trust in IGL's stability and growth potential.

• Negligible impact of INR depreciation on CNG: IGL meets ~40% of its gas demand for CNG segment from RLNG, and the QTD average JKM LNG price has reduced to USD 11.15/mmbtu as against USD 11.79/mmbtu recorded in the previous quarter (i.e., -5%). This drop in gas cost has brought down the blended raw material cost of IGL for CNG segment by ~2% QoQ (from ~ USD 12.2/mmbtu to ~ USD 11.9/mmbtu) as per our calculations. This reduction in IGL's raw material cost for CNG segment has offset the increase in cost due to INR depreciation (from INR 87 in Q2FY26 to INR 89 QTD Q3FY26), leading to a negligible impact on IGL's earnings.
• Impact of INR depreciation on DPNG: DPNG segment, which contributes ~8% of IGL's total volumes, meets 100% of its gas requirement from the APM gas. With APM gas prices remaining unchanged sequentially and INR depreciating by ~2%, the total gas cost increase for IGL's DPNG segment comes to around INR 0.5/scm. Given the contribution to total volumes being low from DPNG segment, we do not view this rise in gas cost concerning
• Price hike requirement in case of further INR depreciation: According to our calculations, in case the blended raw material cost stays at the current levels and INR depreciates further by two rupees against USD, IGL will need to undertake a price hike of INR 1.38/kg for the CNG segment and INR 0.52/scm for the DPNG segment.

IGL Target Price

"Factoring in the YTD performance, we tweak our FY26/27 estimates marginally, resulting in a FY26/27E EPS cut of 3.0/3.1%. We have revised the TP to INR 248/sh (previously INR 249/sh; WACC 10.5%, terminal growth rate 1.5%). The stock is trading at 12.9x Dec-26E EPS," recommended the research analysts of HDFC Securities Limited (HSL).

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