Indraprastha Gas Ltd (IGL): Gas Distribution with Growth Momentum
Indraprastha Gas Ltd (IGL) is a leading City Gas Distribution (CGD) company serving Delhi-NCR and other regions, offering Compressed Natural Gas (CNG) and Piped Natural Gas (PNG). Established in 1998 as a JV between GAIL, BPCL, and the Delhi government, IGL is a PSU-listed utility focused on expansion and diversification.
📊 Q4 FY25 & FY25 Financial Snapshot
- Q4 FY25 Revenue: ₹4,431.1 cr, up 5% YoY; Q4 EBITDA ₹497 cr (up 37% QoQ); EBITDA margin improved to ~13%.
- Q4 FY25 Net Profit: ₹455.1 cr (+5% YoY).
- FY25 Totals: Revenue ₹16,800.9 cr; EBITDA ₹1,978 cr; PAT ₹1,713 cr.
- Sales Volume: Averaged 8.99 mmscmd (+6% YoY); CNG +6%, PNG +11%.
- Dividend: Final dividend ₹1.50 per share in addition to ₹5.50 interim, implying yield ~2.1%.
💹 Stock Performance & Analyst View
- IGL shares hovered around ₹226–227 on July 7, 2025, with a market cap ~₹31,758 cr and P/E ~18.5×.
- Following Q4, IGL rallied ~8% over two days; Motilal Oswal upgraded to ‘Buy’ with ₹225 target, citing margin recovery and EPS growth (~9% CAGR).
- The stock rebounded ~3–4% pre-Q4 results (April 22), tracking board-approved dividend and investor optimism.
- 10‑year ROI remains strong (~+323%) despite recent volatility (~–22% over last 2 years).
⚖️ Strengths & Risks
| Strengths | Risks |
|---|---|
| Market leader in Delhi‑NCR CGD space; strong regulation-backed demand | Exposed to APM gas allocation volatility and LNG price shifts |
| Healthy volume growth: CNG +6%, PNG +11% | Margins sensitive to gas cost inflation |
| Attractive dividend yield (~2.1%) and robust FY25 earnings | Recent high valuation (~19× P/E) may limit upside |
| Management diversifying: 500 MW solar JV with RVUNL | Regulatory/policy risk in CGD licensing and EV competition |
🧭 Outlook & Catalysts
- Margin recovery expected from easing input costs and CNG price adjustments in April 2025.
- Targeting ~10% volume growth in FY26, backed by new CGD geographical areas.
- Solar diversification (500 MW Rajasthan project) supports clean energy pivot.
- Regulatory support from pipeline tariff reforms may reduce transportation costs and boost spreads.
- Upcoming corporate updates: Q1 FY26 earnings, policy announcements, and EV transition impact trends.
✅ Conclusion
IGL is a reliable CGD utility with stable earnings, notable volume growth, and steady dividend payouts. Though valuation is on the higher side, margin recovery, rural penetration, and diversification into solar offer balanced potential. Ideal for investors seeking structural play in India’s energy transition, provided commodity cost dynamics remain stable.
