Indraprastha Gas Ltd, is leading natural gas company, is going to announce its first-ever bonus issue next week. Accordingly, the stock price of this natural gas company will be in focus. The majority of the consensus of recommendation in IGL is hold. The stock price is below Rs 385 levels currently, and it has been in red YTD. A bonus issue is free of cost and offered by a listed company, that multiplies the number of shares being held. However, the share price gets adjusted to the ratio.
Indraprastha Gas Share Price:
After market hours of December 6, IGL stock closed at Rs 383.90 apiece, marginally up, with a market cap of Rs 26,873.03 crore on BSE. The stock's 52-week high and low is at Rs 570.60 apiece and Rs 306.50 apiece respectively. Its price-to-equity ratio is at 16.72x, while its return on equity is at 17.13%.
YTD, IGL stock has dipped by 8.70%, while in a year, the downside is about 6% on BSE.
Indraprastha Gas Bonus Issue:
As per the regulatory filing, Indraprastha Gas said that its meeting of the Board of Directors is scheduled to be held on December 10, 2024, inter-alia to consider the proposal for the issue of Bonus Shares to the equity shareholders of the Company in the ratio, as may be fixed, subject to the Shareholders' approval.
Bonus shares are one of the many corporate actions that listed companies announce on several occasions. Bonus shares are like incentives which are free of cost given to investors. Under this corporate action, new shares are issued at the existing Face Value of equity shares of the company. Hence, the face value remains the same post-bonus issue.
HOLD Indraprastha Gas:
In its latest report, BOB Capital Markets said that IGL indicated a near-term increase of Rs 5-6/kg due to the loss of APM gas allocation for the CNG segment and confirms the need for the price increase. Further, it cited that a higher need for a price increase than MAHGL could pose a risk to commercial vehicle conversions as well as current momentum for PVs.
Accordingly, on the growth ahead, BOBCAP's note said, "We lower our FY25-FY27E EBITDA forecasts by ~25% lowering EBITDA margin assumptions by ~Rs 2/scm to below Rs 6/scm. We believe IGL needs to prioritise growth and not hamper current momentum by compromising on margins. We believe that prioritising margins in a higher range could pose a risk to growth momentum and have a higher impact on long-term EBITDA growth.."
On the valuation, BOBCAP said, "Factoring in lower margins and slower volume growth, we lower the DCF-based TP to Rs 455 (from Rs 600). For our DCF, we lower FY24-33E growth to 7% (from 7.5%) and average margin to Rs 6.5/scm (from Rs 8/scm). Our TP implies an FY26 target multiple of 19.0x, higher than the 5Y mean 1Y-fwd P/E of 18.1x. This is higher than the implied target multiple for MAHGL at 15.5x due to the use of a higher terminal growth rate of 4% (2.5% for MAHGL) reflecting a larger footprint. As IGL has corrected by 25% over the past month, we now have an 8% upside, and we reiterate HOLD. "
From the current price, IGL has the potential of 19% upside ahead.
About Indraprastha Gas:
IGL supplies PNG in all leading hotels, restaurants, malls, commercial complexes, educational/religious institutions and hospitals in various districts in and around Delhi-NCR under the commercial sector. As such, IGL is ready to be your energy solutions provider - for commercial, industrial and transportation needs - all the while keeping your environment clean and expenses lean.
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