According to reports from The Financial Express, Indraprastha Gas delivered better-than-expected operational performance in Q3 FY26 despite facing elevated gas procurement costs. The company reported total gas volumes of 9.7 million metric standard cubic metres per day, representing a 6% year-on-year increase and surpassing brokerage estimates of 9.3 million metric standard cubic metres per day. Compressed natural gas volumes increased 5.5% year-on-year during the quarter, while domestic piped natural gas and industrial volumes came in 19% and 7% above estimates respectively. The company's earnings before interest, taxes, depreciation and amortisation per standard cubic metre stood at ₹4.8, which was 44% above brokerage estimates, while profit after tax reached ₹280 crore, ahead of expectations despite a 15% decline compared to the same period last year.
As reported by The Financial Express, management commentary remained encouraging on future volume growth with compressed natural gas volumes expected to rise 10% to 13% in FY27 and the company targeting to exit the year with volumes of 10.6 million metric standard cubic metres per day. The company is currently targeting 3.5 lakh additional billed domestic connections under PNG Drive 2.0 in FY27, with nearly 5 lakh already-connected but inactive customers that could be converted into active users with minimal infrastructure spending. The brokerage noted that earnings before interest, taxes, depreciation and amortisation margins are expected to remain in the range of ₹7 to ₹8 per standard cubic metre.
According to The Financial Express, gas procurement costs increased nearly 25% due to geopolitical pressure on liquefied natural gas prices during the quarter. To offset part of the impact, the company raised compressed natural gas prices by ₹3 per kilogram during the quarter. The brokerage identified operational concerns including supply to industrial and commercial customers reduced by 20% in Q4 to reduce exposure to imported liquefied natural gas volumes, and Delhi volumes remained sluggish with only 1% year-on-year growth. The compressed natural gas conversion among public transport fleets in Delhi has largely reached saturation levels, with only 25 Delhi Transport Corporation buses left for conversion.
As reported by The Financial Express, Motilal Oswal reiterated its 'Buy' rating on Indraprastha Gas with a target price of ₹220, implying a 40% upside from prevailing levels. The brokerage valued the stock at 15 times December 2027 estimated standalone earnings plus ₹43 per share towards joint venture valuation. The company currently trades at 18.3 times one-year forward price-to-earnings ratio, broadly in line with its historical average. Motilal Oswal expects volume growth to clock an 8% compounded annual growth rate between FY26 and FY28, with earnings before interest, taxes, depreciation and amortisation and profit after tax expected to register an 18% compounded annual growth rate over the same period.
