Emkay maintains ‘hold’ on IGL, cites expensive valuation
Mumbai: Brokerage Emkay Global has maintained its ‘hold’ rating on Indraprastha Gas, with a target price of Rs 300 a share, citing expensive valuation. “We have a ‘hold’ rating due to the expensive valuation of over 20 times its FY 2021 consolidated estimate for EPS,” the brokerage said. The brokerage said while the “smooth sailing” for the company will continue, capital expenditure is expected to increase. Emkay quoted IGPL management that expects 11-12 per cent volume growth yearon-year each in FY20 and FY21. CNG sales are aided by conversion of cars, taxis and commercial vehicles. “In domestic PNG, IGL plans to add 0.25 million connections annually which should ensure over 10 per cent growth,” the brokerage said. New CNG outlets are also aiding growth with sixty planned for F Y20.. IGL expects FY20 capex at Rs 1,000 crore, while that for FY21 it could be at Rs 1,200 crore as Ajmer and other areas won in 9th and 10th rounds are developed. IGL’s core area capex would be up to Rs 700 crore, while larger new areas such as Gurgaon and Ajmer would have Rs 100 crore each annually. The smaller ones would have Rs 50 crore to Rs 70 crore in capex each.