Indraprastha Gas (IGL IN) – Q2FY26 Result Update – Steady volume growth; margins under pressure – REDUCE
Published on 14 Nov 2025
Indraprastha Gas (IGL) delivered steady volume growth of 3.2% YoY and 2.0% QoQ, inline with our estimates. However, EBITDA/scm declined to Rs5.2/scm (PLe: Rs5.8/scm), vs Rs6.5/Rs6.2/scm in Q2FY25/Q1FY26, as higher gas costs (+12.5% YoY, +4.0% QoQ) outweighed the benefit of lower opex (-6.3% YoY, -10.0% QoQ). Overall, EBITDA stood to Rs4.4bn (Ple Rs4.8bn, BBGe Rs5.2bn, -17.4% YoY, -13.5% QoQ). PAT came in at Rs3.7bn (Ple Rs3.5bn, BBGe Rs4.1bn, -13.6% YoY, +4.7% QoQ). In H1FY26, EBITDA/PAT declined 14.3%/12.5% YoY to Rs9.5bn/Rs7.3bn respectively. IGL has guided for 8-10% YoY volume growth in FY26 and an incremental 1mmscmd in FY27. However, we continue to build in a conservative volume CAGR of 5% over FY25–28E. Co. expects to achieve EBITDA margin of Rs7-8/scm, while the VAT reduction should provide a Rs1/scm tailwind, we believe the potential cut in APM gas allocation could increase gas costs further and offset part of this benefit. As a result, we build in EBITDA/scm of Rs5.7/Rs5.9/Rs6.4 for FY26E/FY27E/FY28E. We continue to maintain the rating at ‘Reduce’ and value the company based on standalone 15x FY27/FY28E Adj.EPS and add another Rs32 for investments at 25% discount, leading to a TP of Rs201 (earlier: Rs192)
