HDFC Securities Places Buy On Midcap Gas Stock For 17% Gains, Trading Near 52 Week High

Broking firm HDFC Securities places a "Buy" on Indraprastha Gas Ltd. (IGL) with a target price of Rs. 575/share. The brokerage claims a 17% potential upside if the stock is purchased at the current market price. IGL operates in the gas distribution sector. It is a midcap stock having a market capitalisation of Rs. 34,531.04 crore.

Strong margin performance, Buy for a target price of Rs. 575/share

HDFC Securities said, "Our BUY recommendation on Indraprastha Gas (IGL) with a target price of INR 575 is based on (1) strong volume growth at ~12% CAGR over FY23-25E, (2) robust margins with the government allocating gas from the HPHT (high-pressure, high-temperature) fields to the priority sector, and (3) a strong portfolio of new geographical areas (GAs) ensuring volume growth visibility. Q4FY23 EBITDA stood at INR 4.7bn, up +9% QoQ, well above our estimate; however, it declined 7% YoY, owing to higher input gas cost. APAT stood at INR 3.3bn, (-9% YoY, +19% QoQ), above our estimate. The reported volume was at 8.26mmscmd (+7% YoY, +2% QoQ)."

Stock Outlook

The stock of Indraprastha Gas last traded at Rs. 493.30/share, up 0.67% from its previous close of Rs. 490/share. The stock hit the new 52-week high on 9 May 2023 at Rs. 515.70/share and 52-week low on 17 June 2022 at Rs. 335.35/share, respectively.

The stock has performed well in the past 5 years. It jumped 1% in the past 1 week and 1.67% in the past 1 month, respectively. It has given 32.38% positive return in 1 year, 8.04% in 3 years and 83.14% in 5 years, respectively.

About - Indraprastha Gas Ltd.

Incorporated in 1998, Indraprastha Gas Ltd. (IGL) took over Delhi City Gas Distribution Project in 1999 from GAIL (India) Limited. IGL is in the business of city gas distribution in the National Capital Territory of Delhi. IGL also supplies the gas to the nearby regions of Noida, Greater Noida, Ghaziabad, Gurugram, Meerut, Shamli, Kanpur, Hamirpur, Muzaffarnagar, Karnal and Rewari, Fatehpur, Ajmer, Hapur, Pali, Rajasmand.

Disclaimer - The stock has been picked from the brokerage report of HDFC Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.