Target: ₹220

CMP: ₹154.80

Indraprastha Gas’ (IGL) Q4FY26 EBITDA/scm came in 44 per cent above our estimate at ₹4.8. Gas costs and opex increased about ₹1/0.8 per scm quarter on quarter in Q4. Total volumes were slightly below our estimate at 9.69 mmscmd, rising 6 per cent year on year. Resulting EBITDA beat our estimate by 51 per cent at ₹420 crore (-15 per cent year on year). IGL’s PAT beat our estimate by 44 per cent at ₹280 crore (-21 per cent).

CNG volumes grew 5.5 per cent year on year. The management has guided for a robust 10.6 mmscmd exit volume for FY27, driven by 10-13 per cent growth in CNG volumes, and EBITDA margins at ₹7-8/scm. IGL has connected a total of 3.44m D-PNG customers, of which 2.45 million are currently billed. Under PNG Drive 2.0, the company is targeting 0.35 million new billed domestic connections in FY27, supported by a strong pipeline of about 0.5 million already-connected but non-consuming customers.

The management indicated that gas procurement costs have increased about 25 per cent from pre-geopolitical crisis levels (Q3FY26 gas cost: ₹35.8/scm). However, it has taken a ₹3/kg CNG price hike, which is likely to provide margin support. Volumes are expected to remain weak in Q1FY27.

We value IGL at 15x December 2027E SA P/E and add ₹43/share as the value of JVs to arrive at our TP of ₹220. At 2 per cent FY27E dividend yield and 18 per cent EPS CAGR over FY26-28, we believe the valuation is attractive. Reiterate Buy.

Published on May 20, 2026