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Reduce Indraprastha Gas; target of Rs 122: Angel Broking

Posted on: May 30th, 2009 and is filed under Brokerage Recommendations.

Angel Broking has recommended a reduce rating on Indraprastha Gas with a price target of Rs 122 in its report dated May 28, 2009.

“For 4QFY2009, IGL reported 21.8% yoy jump in Operating Income to Rs 228.5 cr (Rs 187.6 cr), which was marginally above our expectation of Rs 225.8 cr. CNG volumes increased 19.2% yoy to 121.1 million kg (101.6mnkg), which was in line with our expectation of 120.7 million kg. PNG volumes increased 27.3% yoy to 15.4mmscm (12.1mmscm), which was above our expectation of 14.6mmscm. Gas sourcing costs increased by a whopping 42.7% yoy to Rs 115.7 crore (Rs 81.0 crore), which was way above our expectation of Rs 99.3 crore. This was primarily due to the company paying towards excess drawal of natural gas in 4QFY2009.”

“At the CMP of Rs 132, the stock is available at 9.4x FY2011E EPS and 2.1x FY2011E P/BV. In spite of the steep increase in the stock price over the recent past, it has severely underperformed the benchmark indices. The stock performance over the past could largely be attributed to improved market sentiment in turn implying lower risk aversion. Factoring the same, we have reduced our WACC to 12.7% (14.7%) by lowering the assigned stock risk premium to 1% (3% earlier). On account of the same, our Target Price stands increased to Rs 122 translating into a downside of 7.5% from current levels. Thus, we recommend a Reduce on the stock,” says Angel Broking’s report.

source: Moneycontrol

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