Earnings Outlook
High gas prices to hit Indraprastha Gas Jul-Sept net profit
This story was originally published at 12:36 IST on 28 October 2024
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By Akshay V. Johnson
MUMBAI – Indraprastha Gas Ltd. is expected to post weak earnings for the September quarter due to a rise in natural gas prices. The company is likely to report a consolidated net profit of INR 4.64 billion for the September quarter, down 13% on year, according to the average of estimates from 12 brokerages. The company is expected to clock revenues of INR 36.6 billion for the September quarter, down 4% on year. Sequentially, the company's net profit for Jul-Sept is seen rising 16%, and the revenue is expected to fall 6%.
Among estimates, the highest projection for the top line of INR 40.5 billion was given by Anand Rathi Share and Stock Brokers Ltd. and the lowest estimate of INR 33 billion was given by ICICI Securities Ltd. The highest projection for the bottom line was given by Emkay Global Financial Services Ltd. at INR 5.37 billion and the lowest estimate was given by ICICI Securities Ltd. at INR 4 billion.
Nirmal Bang Securities Pvt. Ltd., on other hand, expects the company's net profit to fall 15% on year and revenues to grow 3% on year for the September quarter. The estimated decline is based on the fall in per standard cubic metre margins due to a rise in liquefied natural gas prices. The brokerage said the slowdown in electric vehicle sales, as per the latest reports, will reduce the near-term threat from electric vehicles for the growth of vehicles running on compressed natural gas.
The growth in private vehicles and the company's expansion into new geographical areas, will boost volumes 9% on year in the latest quarter, Nuvama Wealth Management said. Nomura Financial Advisory and Securities (India) Pvt. Ltd. estimates Indraprastha Gas to report total sales volume of 8.8 million standard cubic metre for Jul-Sept, up 6% on year. This is likely to be driven by a 5% on-year growth in CNG sales and 8% on-year rise in piped natural gas sales of the company.
Competition from alternate fuels and stagnant growth in Haryana are risks to the volume growth prospects of the company, Motilal Oswal Financial Services Ltd. said. The brokerage estimates the company's volumes to rise 2% sequentially in the September quarter. Kotak Institutional Equities estimates the company's volumes to grow 5% on year and 1.4% sequentially.
The gas distributor's earnings before interest, tax, depreciation and amortisation for the September quarter are estimated to be INR 6.10 billion, according to the average of estimates from 11 brokerage firms. The company's EBITDA is expected to be in the range of INR 5.69 billion to INR 6.60 billion.
Higher realisation and lower operating expenditure will raise the company's EBITDA 1% on year and 13% sequentially during the quarter, Nuvama said. This is despite an increase in spot prices of liquefied natural gas, the brokerage said. Kotak expects Indraprastha Gas' EBITDA to remain flat sequentially for Jul-Sept but fall 11-12% on year.
In June, the company hiked CNG prices by INR 1 per kilogram following the INR 2.5 per kilogram price cut taken in March. Kotak said higher natural gas costs would offset the price hike made in June. Nomura expects the company to post-blended EBITDA per standard cubic metre of INR 7.6. Indraprastha Gas' blended gross margins are expected to fall 4% on-year but rise 2% sequentially for the September quarter, Nomura said.
At 1117 IST, shares of Indraprastha Gas traded at INR 412.45 on the National Stock Exchange, down 0.3%. The company is scheduled to report its earnings for the September quarter Monday.
Following are the Jul-Sept earnings estimates for Indraprastha Gas based on reports compiled by Informist from 12 brokerage houses: (in INR million)
Brokerage | Net Sales | Net Profit | EBITDA |
Anand Rathi Share and Stock Brokers Ltd. | 40,454.00 | 4,643.00 | -- |
Antique Stock Broking Ltd. | 39,614.00 | 4,055.00 | 6,070.00 |
Elara Securities (India) Pvt. Ltd. | 37,869.00 | 5,004.00 | 6,357.00 |
Emkay Global Financial Services Ltd. | 36,855.00 | 5,365.00 | 6,238.00 |
ICICI Securities Ltd. | 33,000.00 | 4,000.00 | 6,000.00 |
Kotak Institutional Equities | 36,219.00 | 4,541.00 | 5,845.00 |
Motilal Oswal Financial Services Ltd. | 34,217.00 | 4,032.00 | 5,862.00 |
Nirmal Bang Equities Pvt. Ltd. | 35,677.00 | 5,290.00 | 5,685.00 |
Nomura Equity Research | 36,357.00 | 4,546.00 | 6,148.00 |
Nuvama Wealth Management Ltd. | 38,085.00 | 5,171.00 | 6,603.00 |
Prabhudas Lilladher Pvt. Ltd. | 34,100.00 | 4,400.00 | 6,100.00 |
YES Securities (India) Ltd. | 36,753.00 | 4,644.00 | 6,151.00 |
Average | 36,600.00 | 4,640.92 | 6,096.27 |
End
Edited by Akul Nishant Akhoury
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