IGL's Q4 Performance: A Mixed Bag
Indraprastha Gas Ltd (IGL) announced its financial results for the fourth quarter of fiscal year 2026, revealing a complex picture for investors. While the city gas distributor's profit after tax (PAT) of Rs 280 crore significantly surpassed analyst estimates by 44 percent, it also marked a notable 21 percent decline compared to the same period last year. Similarly, the company's EBITDA came in at Rs 420 crore, beating estimates by 51 percent, despite a 15 percent year-on-year drop. Total gas volumes for the quarter were 9.69 million metric standard cubic meters per day (mmscmd), a 6 percent increase year-on-year, though slightly below some analyst projections.
Brokerage Views: Buys Outnumber Reduces
Following the Q4 FY26 earnings report, several prominent brokerages reaffirmed their 'Buy' ratings on IGL shares, though with varying target price adjustments. Motilal Oswal Financial Services Ltd (MOFSL) reiterated a 'Buy' with a target price of Rs 220 per share, citing attractive valuations and an 18 percent EPS CAGR over FY26-28. They noted that IGL's EBITDA per standard cubic meter (scm) was 44 percent above their estimate.
PL Capital maintained its 'Buy' rating, increasing its target price to Rs 181 from Rs 174. The brokerage highlighted improving volume growth and the recent Rs 3/kg CNG price hike as positive factors, though it cautioned about potential future price increases if West Asia disruptions persist.
Systematix Institutional Equities also kept its 'Buy' recommendation, revising its target price to Rs 212 (from Rs 226). They pointed to IGL's robust operational expansion, including the addition of 65 new CNG stations and 3.7 lakh domestic piped natural gas (DPNG) connections in FY26. The firm anticipates improved profitability in FY28 despite elevated gas costs in the near term. YES Securities similarly maintained a 'Buy' rating, setting a revised target of Rs 190 per share.
Nuvama's 'Reduce' Call and Sector Concerns
In contrast to the predominantly positive outlook, Nuvama Institutional Equities maintained its 'Reduce' call on IGL, trimming its target price to Rs 148 (from Rs 173). Nuvama expressed caution regarding the city gas distribution (CGD) sector, citing uncertainty from ad-hoc government policies, which could lead to a de-rating of sector multiples. They also raised concerns about IGL's sustainable margin guidance, leading to a 15 percent reduction in their FY27/28E EBITDA forecasts due to anticipated near-term margin pressures.
Operational Growth and Market Reaction
Operationally, IGL has shown expansion, reaching 1,024 CNG stations by the end of FY26. The company has also guided for an FY27 exit volume of 10.6 mmscmd and an EBITDA per scm of Rs 7-8. However, the market reacted cautiously to the results and outlook, with IGL shares trading 1.72 percent lower at Rs 154.55 in Wednesday's trade.
Disclaimer: This article provides information for general knowledge and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.