Prabhudas Lilladher has upgraded its rating on Indraprastha Gas to 'HOLD' with a target price of Rs 402, following a recent research report.
The company reported Q2 results that fell short of expectations, with EBITDA at Rs 5.4 billion, down 7.9% quarter-on-quarter, and PAT at Rs 4.3 billion, reflecting a 7.4% increase QoQ, supported by higher other income.
Despite strong volume growth of 8.7% year-on-year, the EBITDA per standard cubic meter (scm) was lower than anticipated at Rs 6.5, down 12.8% QoQ.
Indraprastha Gas is exploring various sourcing options after a reduction in APM allocation, indicating potential price hikes in the future.
The firm projects a conservative volume growth CAGR of 7% from FY24 to FY27, with an EBITDA/scm of Rs 6.5 for FY26/27.
The stock is currently trading at 17.2x and 15.9x FY25/26 EPS.