Indraprastha Gas (IGL IN) – Q4FY26 Result Update – Elevated gas costs weigh on profitability – BUY
Published on 19 May 2026
Total Q4FY26 volumes increased 2.8% QoQ and 5.6% YoY, driving revenue growth of 2.3% QoQ and 5.5% YoY to INR41.6bn. Elevated input gas costs and higher other expenses weighed on profitability, with Adj. EBITDA/scm declining to INR4.8/scm in Q4FY26 from INR5.9/scm in Q3FY26. Consequently, reported EBITDA stood at INR4.2bn, declining 10.5% QoQ and 14.4% YoY. Higher interest costs and lower other income further impacted earnings, with PAT declining 22.7% QoQ and 20.7% YoY to INR2.8bn. Management expects to achieve an exit volume of ~10mmscmd in FY27E. We build in a volume CAGR of 5.1% over FY25-FY28E (vs. earlier 6.1%), with estimated volumes of 9.9mmscmd and 10.4mmscmd for FY27E and FY28E, respectively. We maintain “Buy” rating, supported by an improving volume growth trajectory. The recent INR3/kg CNG price hike in May’26 provides some relief against elevated input costs. However, if West Asia disruptions continue, additional price hikes may be required to offset margin pressures. We value the standalone business at 11x FY28E Adj. EPS and assign INR28/share for investments (at a 25% holding company discount), resulting in a revised target price of INR181/share (earlier INR174/share).
