Whalesbook
Indraprastha Gas Limited (IGL), India's largest city gas distributor, announced a 21% year-on-year drop in net profit for the fourth quarter ended March 2026, reaching Rs 277.08 crore. The decline was driven by higher input gas costs and supply chain issues linked to the West Asia region. However, IGL saw a 6% increase in quarterly sales volume, reaching 9.69 million standard cubic metres per day.
Volume Growth Continues
The sales volume growth was spread across its offerings, with Compressed Natural Gas (CNG) volumes up 5% and Piped Natural Gas (PNG) volumes up 6% compared to the previous year. Total revenue from operations for the quarter rose 6% to Rs 4,571.49 crore.
Brokerages Diverge on IGL's Outlook
Following the financial results, brokerage firms presented differing views on IGL's future. Morgan Stanley maintained an 'Equal-weight' rating with a target price of Rs 205. Nuvama kept a 'Reduce' rating, lowering its target to Rs 148 from Rs 173, citing policy uncertainty and an unfavorable risk-reward balance. In contrast, Motilal Oswal reiterated its 'Buy' recommendation, raising its target price significantly to Rs 220 from Rs 177, due to attractive valuations and an expected 18% earnings per share compound annual growth rate from FY26 to FY28. Emkay maintained an 'Add' rating but reduced its target price by 5% to Rs 180 from Rs 190, citing missed EBITDA estimates and higher finance costs, which led to a 12% cut in its FY27 earnings per share forecast.
Margin Pressures and Future Prospects
EBITDA margins stood at Rs 4.8 per standard cubic meter (scm), below the mid-cycle average. IGL has implemented a Rs 3/scm price increase for gas. Some analysts, like Morgan Stanley, favor fuel retailers over gas companies due to slower market expansion. Nuvama noted that while IGL's EBITDA exceeded consensus by about 5%, they remain cautious about sustainable margin guidance and potential sector multiple re-ratings due to policy shifts. Motilal Oswal projects EBITDA margins of INR 4.3/INR 6.5 per scm for FY27/28, with volumes expected to grow at an 8% CAGR from FY26 to FY28.