Target price: Rs 162.00
- Indraprastha Gas Limited (IGL) is a joint venture of GAIL (India) Limited, Bharat Petroleum Corporation Limited and the Government of the National Capital Territory of Delhi.
- IGL was incorporated to implement the Compressed Natural Gas (CNG) expansion programme and the Piped Natural Gas (PNG) project for varied applications in the domestic and commercial sector. DTC buses, taxis and auto rickshaws, generate approximately 92 per cent of the revenues for the CNG segment of IGL.
- We expect the company to witness a CAGR of 12.8 per cent in revenues from sale of CNG between FY06-FY09. Due to increasing awareness about PNG and its advantages over LPG, the demand for it is increasing and the revenues expected from the sale of PNG show a CAGR of 51.9 per cent during FY06-FY09.
- The stock trades at 12 times its one year forward earnings or 6 times EV/EBIDTA.
- I recommend you buy the stock with a price target of Rs 162.
