Indraprastha Gas (IGL IN) – Q3FY26 Result Update – Improving volume trajectory – Upgrade to ‘Accumulate’
Published on 14 Feb 2026
We upgrade IGL to “Accumulate” from “Hold”, supported by improving CNG volume growth and the recent correction offering a better opportunity. Total volumes grew 1.2% QoQ and 3.5% YoY. Lower gas costs aided margin recovery, with EBITDA/scm improving to Rs5.4/scm vs Rs5.2/scm QoQ and Rs4.3/scm YoY. Adjusted for one-time Rs0.3bn labour provision, adj. EBITDA/scm stood at Rs5.8/scm in Q3FY26. EBITDA stood at Rs4.7bn (+6.7% QoQ, +29.9% YoY), while PAT stood at Rs3.6bn (-3.7% QoQ, +25.5% YoY). IGL indicated that DTC volumes are expected to fall to zero by Mar’26, with normalized CNG volume growth likely from Q3FY27 onward. IGL has maintained its volume guidance of 10mmscmd in Q4FY26 and incremental 1mmscmd addition annually over FY27E–FY28E. We build in a volume CAGR of 6.1% over FY25–FY28E, estimating total volumes of 9.9/10.7mmscmd in FY27E/FY28E. We factor in zonal tariff and VAT benefits, building EBITDA/scm of Rs6.0/Rs6.2 for FY27E/FY28E vs IGL’s long-term guidance of Rs7.0/scm. We upgrade the stock to “Accumulate” and value the standalone business at 13x Dec’27E adj EPS and add Rs33 per share for investments at 25% discount, arriving at a revised target price of Rs191 (earlier Rs196).
