IGL Shares Fall 2% After 86% Drop In Net Profit For Q1FY21; ICICI Maintains ‘Sell' Call

Shares in Indraprastha Gas Limited (IGL) were dragged as much as 2% to Rs. 405.2 per share on the BSE on August 27, 2020 after the company reported 85.6 percent decline in its consolidated net profit for the quarter ended June of FY21 at Rs. 35.18 crore. In the corresponding period, a year ago, the company posted profit of Rs. 245.04 crore.

IGL Shares Fall 2% After 86% Drop In Net Profit For Q1FY21; ICICI Maintains ‘Sell' Call

Revenue from operations stood at Rs 692.53 crore, down 60 per cent in comparison to Rs 1,744.07 crore logged in the June 2019 quarter. Also total income at the company fell 59 per cent year-on-year (YoY) to Rs 723.16 crore.

The net profit at the firm on a standalone basis has been reported at Rs. 31.84 crore, declining 85% y-o-y as against Rs. 218.36 crore reported for the same period last year.

Meanwhile, ICICI Securities has placed a 'Sell' call on the stock as decline in margin can be witnessed earlier and could be sharper if the gas used for CNG is deregulated. "Indraprastha Gas' (IGL) Q1FY21 standalone and consolidated earnings per share (EPS) plunged 85- 86 per cent YoY, hit by fall in volumes and margins due to lockdown. Q1 earnings fall was steeper than our estimate despite volume decline being less steep due to big disappointment on earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin," note Vidyadhar Ginde, and Aksh Vashishth, research analysts at ICICI Securities.

Another brokerage firm Prabhudas Lilladher has a 'buy' call on the counter with the target price set at Rs. 590 per share. "IGL remains an enviable business model with high volume growth due to geographical expansion along with the addition of new buses and taxis. Also, shift to private vehicle ownership post Covid pandemic to drive CNG volumes. IGL remains a play on rising pollution concerns, as the ban put on competing for industrial fuel is a major positive. The sharp drop in spot LNG prices offer new margin levers for the company," the brokerage said in a result review note issued on August 26.

At 11:25 am, the stock of Indraprastha Gas quoted down by 1.02% or Rs. 4.2 at Rs. 409.35 shares apiece on the BSE.

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