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Company Report | Q4FY11 Result Update

LONG TERM INVESTMENT CALL

2 June 2011 Industry CMP (INR) Target (INR) Upside / Downside (%) 52 week High/Low (INR) Market Cap (INR Mn) 3M Avg. Volumes (000’s) P/E (FY12e) Shareholding Pattern (%) Gas 342 350 2.3 374 2,409,226 287.2 16

HOLD

Indraprastha Gas Ltd (IGL) Q4FY11 net sales came higher than the Unicon estimates on the back of higher volume. But EBITDA and PAT are inline with our estimates. During the quarter Q4FY11, IGL’s net sales jumped 77% YoY to INR 5,093 mn while on an annual basis net sales has shown an increment of 61.8% YoY to INR 17,441 mn in FY11. The increase in revenue was due to the increase in volume by almost 28%, as well as the increase in the price realisation. But increase in price realisation was offset by the increase in the cost of gas. EBITDA for the quarter Q4FY11 stood at INR 1,372 mn, increase of 45% YoY while on annual basis the EBITDA has increased by 29% in FY11 to INR 4,987 mn. EBITDA margin for the quarter Q4FY11 has declined by 573 bps YoY while on an annual basis it has declined 717 bps YoY. Decline in the EBITDA for Q4FY11 was attributed to higher cost of raw material (gas). Gas cost for the quarter has increased by 43% YoY to INR 30,279 mn while on an annual basis it has increased 37% to INR 980,430 mn. IGL’s Q4FY11 PAT has increased 34.3% YoY to INR 692 mn while for FY11 PAT has increased by 20.5% YoY to INR 2,598 mn. However PAT margin for Q4FY11 has contracted by 410 bps YoY to 13.5% while it has decreased by 479 bps on an annual basis to 14.8% in FY11. During the quarter under review, the company’s depreciation charges increased 50% to INR 297 mn YoY on the back of capitalisation of assets. IGL’s other income during the period Q4FY11 has dipped 68.5% YoY to INR 8 mn while it has occurred interest expenses of INR 70 mn which was nil during the corresponding period previous year. The over all increase in the PAT for the quarter is due to higher sales of the company.

Stock Performance

Performance (%) 1 Month IGL 5.7 NIFTY -1.9

3 Months 15.1 1.0

1 Year 46.9 12.5
(INR Mn)

Outlook & Valuation IGL has guided for a volume growth of 20% to 25% for FY12 along with a capex of INR 20 bn over the next three years. IGL plans to spend this amount to expand the infrastructure for compressed natural gas (CNG) and piped natural gas (PNG). At CMP INR 342, the company is trading at PE multiples of 16x its FY12e earnings. Considering the higher demand for the gas going forward and company’s capex to capture the volume growth, we recommend HOLD on the stock with a price target of INR 350.

Particulars Total Income EBIDTA Reported PAT

Actual 5,108 1,372 692

Estimates 4,680 1,300 675

* Source: Bloomberg, Unicon Research

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@unicon.in

Standalone Financials DESCRIPTION Net Sales Other operating income Total Operating Income Total Expenditure EBITDA EBITDA (%) Depreciation EBIT Other Income Interest EBT Tax Profit After Tax Net Profit (%) EPS
Source: Company, Unicon Research

(INR Mn)

Q4FY11 5,093 15 5,108 3,736 1,372 26.9% 297 1,075 8 70 1,012 320 692 13.5% 4.9

Q4FY10 2,878 20 2,898 1,954 944 32.6% 198 746 25 0 771 256 515 17.6% 3.7

YoY 77.0% -22.2% 76.3% 91.3% 45.3% -573bps 50.0% 44.0% -68.5% NA 31.3% 25.1% 34.3% -410bps 34.2%

FY11 17,441 64 17,505 12,518 4,987 28.5% 1,029 3,958 31 132 3,857 1,259 2,598 14.8% 18.6

FY10 10,781 57 10,838 6,973 3,865 35.7% 775 3,091 154 0 3,244 1,089 2,155 19.6% 15.4

YoY 61.8% 11.8% 61.5% 79.5% 29.0% -717bps 32.8% 28.1% -80.0% NA 18.9% 15.6% 20.5% -479bps 20.5%

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@unicon.in

Unicon Investment Ranking Methodology
Rating Return Range Buy >= 20% Accumulate 10% to 20% Hold -10% to 10% Reduce -10% to -20% Sell <= -20%

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@unicon.in