Indraprastha Gas receives hold rating with target price of Rs 402

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.

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