Brokerages Recommend Buying Indraprastha Gas, Target Price Set at Rs 181

Indraprastha Gas Sees Revenue Growth Amid Elevated Input Costs

Indraprastha Gas reported a 2.8% quarter-over-quarter (QoQ) and 5.6% year-over-year (YoY) increase in total Q4FY26 volumes, driving revenue growth of 2.3% QoQ and 5.5% YoY to INR41.6bn. Despite the growth, elevated input gas costs and higher other expenses weighed on profitability, with adjusted earnings before interest, taxes, depreciation, and amortization (Adj. EBITDA) per standard cubic meter (scm) declining to INR4.8/scm in Q4FY26 from INR5.9/scm in Q3FY26.

As a result, reported EBITDA stood at INR4.2bn, declining 10.5% QoQ and 14.4% YoY. Additionally, higher interest costs and lower other income further impacted earnings, with profit after tax (PAT) declining 22.7% QoQ and 20.7% YoY to INR2.8bn.

Key Takeaways

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Management expects to achieve an exit volume of ~10mmscmd in FY27E. Prabhudas Lilladher's research team has revised their volume growth forecast to 5.1% over FY25-FY28E (vs. earlier 6.1%), with estimated volumes of 9.9mmscmd and 10.4mmscmd for FY27E and FY28E, respectively.

The recent INR3/kg CNG price hike in May'26 provides some relief against elevated input costs. However, if West Asia disruptions continue, additional price hikes may be required to offset margin pressures.

Outlook and Valuation

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We value the standalone business at 11x FY28E adjusted earnings per share (Adj. EPS) and assign INR28/share for investments (at a 25% holding company discount), resulting in a revised target price of INR181/share (earlier INR174/share). We maintain a "Buy" rating, supported by an improving volume growth trajectory.