IGL Q2 profit jumps to Rs 400 cr; global brokerages see up to 40% upside

IGL Ltd reported a 30 per cent jump in the September quarter net profit to Rs 400 cr on the back of higher sales volumes.

The Net profit of Rs 400.54 crore in July-September 2021-22 is compared with Rs 307.94 crore net earnings in the same period a year back, the company said in a statement.

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The stock has been a market underperformer so far in the year 2021. It has fallen by a little over 2 per cent in the same period, compared to over 29 per cent return seen in Nifty50.

Reacting to the results, global brokerages remain mixed on the prospects, but see over 40 per cent upside in the next 12 months.

The most aggressive target price of Rs 700 on IGL post Q2 results was put out by UBS that translates into an upside of over 40 per cent from Rs 493 recorded on the BSE.

Revenue from operation grew 60.3 per cent QoQ to Rs 2,016 crore as against Rs 1,257.4 crore posted in the June 2021 quarter.

EBITDA rose by 39.2 per cent to Rs 530.2 crore as against Rs 380.9 crore posted in the previous quarter. Margins contracted to 26.3 per cent in Q2FY22 from 30.3 per cent posted in Q1FY22.  

We have collated a list of recommendations from various global brokerage firms according to a Zee Business TV report:

UBS: Buy| Target Rs 700

UBS maintained its buy rating on IGL post September quarter results with a target price of Rs 700. Higher volume growth offsets rising gas costs, said the note. Stable EBITDA margins despite the rising gas cost is positive.  

Goldman Sachs: Sell| Target raised to Rs 400 from Rs 365

Goldman Sachs maintained its sell rating on IGL post Q2 results but raised the target price to Rs 400 from Rs 365.

The EBITDA was in-line with estimates, but the PAT beat was on the back of other income. “We expect flattish EBITDA growth in FY23 as volume growth is likely to be fully offset by lower margins from a sharp increase in domestic gas prices,” said the note.
 
CITI: Buy| Target cut to Rs 570 from Rs 640

Citigroup maintained its buy rating on IGL post Q2 results but slashed its target price to Rs 570 from Rs 640 earlier.

The second quarter was operationally strong, albeit In-line 2Q. The EBITDA rose 39 per cent on a QoQ basis to Rs5.3bn.

Volumes recovered well sequentially post the second wave, to come in 8 per cent above pre-COVID levels, and margins stayed stable QoQ despite rising LNG prices.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)