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Informist, Friday, Apr. 25, 2025

By Sandeep Sinha

MUMBAI – Indraprastha Gas Ltd. is expected to post weak earnings for the March quarter due to a rise in liquefied natural gas prices, which was only partially offset by the restoration of domestic gas allocation, analysts said. The company's net profit is likely to have fallen almost 20% on year to INR 3.07 billion in the latest quarter, according to the average of estimates from 12 brokerage firms.

The company's bottom line is likely to have declined 7.6% on a quarter-on-quarter basis. Among the estimates, the highest and the lowest projections for net profit were INR 4.12 billion and INR 2.60 billion, respectively. 

The city gas distribution company's revenue is expected to fall 3.5% on year to INR 38.27 billion for the March quarter. Sequentially, the top line is expected to fall 7.7%. The estimates for the top line range from INR 33.30 billion by ICICI Securities and INR 39.61 billion by Nirmal Bang.

Indraprastha Gas operates a city gas distribution business and supplies compressed natural gas for vehicles and piped natural gas for domestic, commercial, and industrial use, primarily across the Delhi National Capital Region and other areas for which it has the right to provide the gas.

Cash profit from operations or earnings before interest, tax, depreciation and amortisation is expected to be INR 4.16 billion, according to the average estimates from 12 broking firms collated by Informist. The company will announce its March quarter earnings on Sunday.

Nomura expects the company's earnings before interest, tax, depreciation and amortisation to increase 13% on quarter to INR 4.1 billion, supported by an uptick in margins on lower input costs and sustained volume growth. "We factor in a recovery in unit EBITDA to INR 4.7/standard cubic metre from INR 4.3/standard cubic metre in Oct-Dec (3QFY25), reflecting the increase in administered pricing mechanism (APM) allocation in Jan-Mar (4QFY25), partly offset by the uptick in US Henry Hub LNG prices, which increased 13% quarter-on-quarter on a delivered basis."

Nuvama Wealth Management said the company's EBITDA is likely to have dipped in Jan-Mar by 9% on year, but grown 31% quarter-on-quarter, as margins fell on an annual basis due to relatively cheap administered pricing mechanism gas de-allocation, but increased on a quarter-on-quarter basis on partial APM gas re-allocation from mid-January. 

ICICI Securities believes that structurally, city gas distribution companies are headed towards an environment of 15-20% higher blended gas prices. However, investment in compressed natural gas penetration, better compressed natural gas vehicle variants, a reduction in refuelling times, a focus on the commercial vehicle segment, and using liquefied natural gas as an option for long-haul vehicles could help drive growth and value over the next five to seven years.

Higher-than-expected increase in gas cost, the inability to pass on gas cost increases, a sharp fall in prices of petrol and diesel, and a sharp cut in the administered pricing mechanism gas allocation are key downside risks, ICICI Securities said.

Shares of Indraprastha have declined 5.7% since the company announced its Oct-Dec earnings on Jan. 27. On Friday, shares of Indraprastha Gas closed 3.9% lower at 178.20 rupees on the National Stock Exchange.

Following are the estimates for Indraprastha Gas' Jan-Mar earnings from 12 brokerage houses:

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Edited by Saji George Titus

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