Earnings Outlook
Higher natural gas prices to hit Indraprastha Gas' Q1 PAT
This story was originally published at 21:05 IST on 29 July 2025
Register to read our real-time news.Informist, Tuesday, Jul. 29, 2025
By J. Navya Sruthi
MUMBAI – Indraprastha Gas Ltd. is expected to post a weak bottom line for the June quarter compared to the year-ago quarter due to higher natural gas prices, according to analysts tracking the company. However, on a sequential basis, its net profit and earnings before interest, tax, depreciation, and amortisation are seen rising due to a quarter-on-quarter fall in natural gas prices and price hikes undertaken by the company, analysts said.
The company's consolidated net profit is expected to fall over 2% on year to INR 3.93 billion, according to the average of estimates from 13 brokerage firms. The lowest projection was INR 3.67 billion by Dolat Capital Market Pvt. Ltd. and the highest was INR 4.68 billion by Nirmal Bang Equities Pvt. Ltd. However, the company's bottom line is expected to grow over 12% from INR 3.49 billion in the trailing quarter.
The company's net sales are expected to rise over 11% on year but may fall slightly on a sequential basis to INR 39.23 billion in the June quarter, according to the average of estimates. ICICI Securities has the lowest sales estimate of INR 35.30 billion and Nuvama Wealth Management has the highest estimate of INR 40.31 billion.
Prices of the August natural gas contract on the Multi Commodity Exchange rose over 35% on year to INR 295.1 per million British thermal units as of Jun. 30. On a quarterly basis, however, gas prices on the MCX fell nearly 16% from INR 351.3 per mBtu on Mar. 31. The quarter-on-quarter fall in natural gas prices, coupled with the company's gas price hikes, will lead to a better growth in net profit and EBITDA in the June quarter, analysts said.
In May, the gas distributor had increased compressed natural gas prices by INR 1 per kilogram to INR 77.09 per kg in Delhi and surrounding regions. The CNG volumes from Delhi account for almost 68% of the company's total sales, according to media reports.
"We expect IGL's (Indraprastha Gas) cost of gas to decline sequentially by INR 1.5/scm (per standard cubic metres) mainly due to improved allocation of NWG (new well gas), 10% decline in crude price... and even the spot LNG prices declining," Dolat Capital said in its pre-earnings report. Hence, the brokerage expects the company's EBITDA per unit to grow to INR 6.5 per standard cubic metres from INR 4.6 per standard cubic metres in the March quarter. The CNG price hike undertaken by the company is likely to boost the overall realisation by INR 0.8 per standard cubic metres.
The company's EBITDA is expected to be steady from the year-ago quarter at INR 5.59 billion, but up 13% from the trailing quarter, according to the average of estimates from 13 brokerages. In the March quarter, the company had reported an EBITDA of INR 4.97 billion. The expected sequential rise in EBITDA and net profit is also because the impact of new well gas allocation will offset the reduction in administered price mechanism allocation amid low natural gas prices.
In April, the government had reduced the domestic gas allocation to the company by around 20%. However, the company has been allocated an additional 125% of the reduction in domestic gas volumes as new well gas which is priced at 12% of the Indian crude basket.
Analysts expect the company's CNG sales volume to grow sequentially in the June quarter. Dolat Capital expects CNG sales volume to grow 3% sequentially due to the holiday season during the June quarter. According to Nomura Equity Research, the company is likely to see a 3% on-year growth in CNG sales volume.
Indraprastha Gas will declare its quarterly financial results Wednesday. Its shares have risen almost 14% since it released its March quarter earnings. On Tuesday, the stock ended at INR 205.95 on the National Stock Exchange, up 1%.
Of the 17 brokerage reports available with Informist on the company, nine have a 'buy' or equivalent rating, four have a 'hold' rating, and the remaining four have a 'sell' rating. Among the brokerages with 'buy' or equivalent rating, the average target price is INR 256 and for 'sell' ratings, the average target price is INR 193.
Following are the Apr-Jun earnings estimates for Indraprastha Gas Ltd. based on reports from 13 brokerage firms in descending order of the estimate of consolidated net profit:
Brokerage | Net Sales | Net Profit | EBITDA |
----(in INR million)---- | |||
Nirmal Bang Equities Pvt Ltd | 38,561.00 | 4,680.00 | 5,551.00 |
Kotak Institutional Equities | 39,225.00 | 4,139.00 | 5,847.00 |
Systematix Shares and Stocks (India) Ltd | 39,615.00 | 4,090.00 | 5,717.00 |
Nuvama Wealth Management Ltd | 40,305.00 | 3,978.00 | 5,776.00 |
Antique Stock Broking Ltd | 39,815.00 | 3,944.00 | 5,645.00 |
ICICI Securities Ltd | 35,300.00 | 3,900.00 | 5,600.00 |
Motilal Oswal Financial Services Ltd | 40,249.00 | 3,843.00 | 5,680.00 |
Yes Securities (India) Ltd | 39,323.00 | 3,823.00 | 5,576.00 |
Prabhudas Lilladher Pvt Ltd | 39,200.00 | 3,800.00 | 5,400.00 |
Nomura Equity Research | 40,179.00 | 3,773.00 | 5,648.00 |
JM Financial Institutional Securities Pvt Ltd | 39,372.00 | 3,730.00 | 5,386.00 |
Emkay Global Financial Securities Ltd | 39,682.00 | 3,721.00 | 5,461.00 |
Dolat Capital Market Pvt Ltd | 39,130.00 | 3,668.00 | 5,399.00 |
Average | 39,227.38 | 3,929.92 | 5,591.23 |
End
Edited by Tanima Banerjee
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