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Indraprastha Gas Ltd: Favorable Policies Boost Prospects - Views on News from Equitymaster
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  • Apr 8, 2016 - Indraprastha Gas Ltd: Favorable Policies Boost Prospects

Indraprastha Gas Ltd: Favorable Policies Boost Prospects
Apr 8, 2016

Indraprastha Gas Ltd (IGL) has announced its results for the quarter and the year ended December 2015. The company has reported 1.5% year on year (YoY) decline in the revenues while net profit for the quarter declined by 2.8% YoY. Here is our analysis of the results.

Performance summary
  • The revenues for the quarter declined by 1.5% YoY. For 9MFY16, the revenues were up by 1.3% YoY.
  • The operating profit for the quarter declined by 1.9% YoY. However, operating profit margin were flat (YoY) at 20.0%. For 9MFY16, operating profit margin stood at 20.3%, down from 22.1% in 9MFY15.
  • The net profit for the quarter declined by 2.8% YoY with net profit margins at 11.3%, down from 11.5% in the corresponding quarter last year. For 9MFY16, the net profit margin stood at 11.1%, down from 12.4% in 9MFY15.

    Financial performance snapshot

    Rs m 3QFY15 3QFY16 Change 9MFY15 9MFY16 Change
    Sales 9,410 9,269 -1.5% 27,570 27,922 1.3%
    Other operating income 34 23 -33.1% 72 80 11.6%
    Total income 9,444 9,292 -1.6% 27,642 28,002 1.3%
    Expenditure 7,524 7,419 -1.4% 21,470 22,254 3.7%
    Operating profit (EBDITA) 1,886 1,850 -1.9% 6,100 5,668 -7.1%
    EBDITA margin (%) 20.0% 20.0% 22.1% 20.3%
    Other income 114 112 -1.5% 277 233 -15.8%
    Finance costs 63 18 -72.4% 259 81 -68.9%
    Depreciation 376 399 6.3% 1,114 1,179 5.9%
    Profit before tax 1,595 1,569 -1.6% 5,077 4,722 -7.0%
    Pretax margin (%) 17.0% 16.9% 18.4% 16.9%
    Tax 513 517 0.9% 1,659 1,636 -1.4%
    Effective tax rate (%) 32.2% 33.0% 32.7% 34.6%
    Profit after tax/(loss) 1,082 1,051 -2.8% 3,418 3,086 -9.7%
    Net profit margin 11.5% 11.3% 12.4% 11.1%
    No. of shares (m) 140
    Diluted earnings per share (Rs)* 28.9
    Price to earnings ratio (x)* 19.1

    *On the basis of last 12 months

  • What has driven performance in 3QFY16?

    • IGL's average sales volumes for 9MFY16 stood at 3.97 million standard cubic metres per day (mscmd) versus an average volumes sales of 3.84 mscmd in FY 15, up 3.4%.
    • Average CNG (compressed natural gas) sales for 9MFY16 stood at 2.27 million kilograms per day (versus 22.07 million kg per day in FY15). During the quarter, CNG and PNG sales volumes grew by around 5.1% YoY. Revenues declined due to decline in the price of CNG and PNG.
    • The operating margin for the quarter were stable on a year on year basis as decline in the input gas cost was offset by increase in other expenditure.
    • Net profit margin too were almost flat on a year on year (YoY) basis. The interest cost declined by 72% YoY. The depreciation expense was up 6.3% YoY.

      Cost summary

      (Rs m) 3QFY15 3QFY16 Change 9MFY15 9MFY16 Change
      Consumption of raw materials (natural gas) 6,112 5,685 -7.0% 17,363 17,512 0.9%
      as a % of sales 65.0% 61.3% 63.0% 62.7%
      Staff costs 163 244 49.1% 494 581 17.5%
      as a % of sales 1.7% 2.6% 1.8% 2.1%
      Other expenditure 1,249 1,490 19.3% 3,613 4,161 15.2%
      as a % of sales 13.3% 16.1% 13.1% 14.9%
      Total expenditure 7,524 7,419 -1.4% 21,470 22,254 3.7%
      as a % of sales 80.0% 80.0% 77.9% 79.7%
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