Shares of Indraprastha Gas Ltd (IGL) surged as much as four percent on Wednesday after the company’s earnings beat expectations on all fronts-profit, revenue, EBITDA — a measure of operating profitability — and margin.

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At 9:21 am, shares of the company were trading 3.6 percent higher at Rs 371.5 on the BSE.

Here’s a look at the company’s financials:

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IGL's expenses increased tremendously. On a quarter-on-quarter basis, higher excise duty, employee benefits expense, depreciation and amortisation expenses weighed on profitability.

Jefferies has a ‘buy’ call on IGL shares and has trimmed its target price by 24 percent to Rs 450. The brokerage firm believes that the gas company’s margin should be under pressure in the second quarter. IGL has reported a 9 percent EBITDA beat led by a better margin.

IGL has enough room to hike prices, Jefferies said while adding that it expects the gas retailer to defend its margin.

Last week, the company hiked the price of piped cooking gas (PNG) for household kitchens in the national capital and adjoining cities. PNG price was increased by Rs 2.63 per unit to "offset input gas cost", marking the second increase in less than two weeks. On July 26, rates were revised by Rs 2.1 per standard cubic meter (scm).

IGL, the firm that retails CNG to automobiles and piped cooking gas to households in the national capital and adjoining towns, notified through a tweet that piped cooking gas in Delhi would now cost Rs 50.59 per standard cubic meter. Earlier it was Rs 47.96.

“There are some challenges, there are some pressures which are coming from the cost side and we expect it to be over Rs 7 for this whole year, but, going forward, since the prices of the CNG and PNG gas is going to go up again from first of October 1, this is a challenge that all city gas distribution (CGD) companies in the country are facing," said Sanjay Kumar, Managing Director, IGL.

He added, "Regarding volume, we hope to maintain the volume trend of about 7.9 million cubic meter or 8 million cubic meter per day for this whole year. It will be very difficult for us to increase it to 8.5 million if these prices are maintained, but 8 million cubic meter per day is maintainable”.

Further, IGL is planning to add 70 to 75 CNG stations this financial year and hopes to add them because the gas company is making good progress in these stations, Kumar pointed out.

However, the foreign brokerage firm has cut its earnings per share estimates for FY23 by 10 percent and FY24 by 9 percent.

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First Published:Aug 10, 2022 10:26 AM IST