Multibagger Stock 2018
Indraprastha Gas Limited (IGL)
(Current Market Price Rs. 296.85, Book Value Rs. 43.02, Face Value Rs.2)
Indraprastha Gas Limited (IGL) incorporated in 1998 can be looked as “Multibagger Stock 2018”. It is a leading City Gas Distribution Company in India. IGL started its operations in NCT of Delhi in 1999 with 9 CNG stations and 1000 PNG consumers. IGL has been providing Compressed Natural Gas (CNG) across NCT of Delhi, Noida, Greater Noida, Ghaziabad and Rewari. The Company had 421 CNG stations, 7.42 lacs residential consumers and 2.9 thousand industrial / commercial customers as on March 31, 2017.Company is fuelling the largest CNG Bus fleet in the World.
The Company is backed by strong promoter group consisting of Gail (India) Limited and Bharat Petroleum Corporation Ltd. (BPCL). Foreign Institutional Investors (FII’s) holds 24.08% shares of this company and around 15% shares are held by Mutual funds and Institutional investors.
Company has increased its steel pipeline network from 707 kms in FY 2015-16 to 778 kms in FY 2016-17 and its MDPE network from 9443 kms in FY 2015-16 to 9940 kms in FY 2016-17. During FY 2016-17 the Company provided 60,867 PNG connections in Delhi and 45,021 PNG connections in the NCR and the total number of connections went up from 6,36,318 in March 2016 to 7,42,206 in March 2017.
Company has been authorised for Rewari geographical area in the recent 6th round of bidding by PNGRB. Company has participated in bids for new geographical areas of Ambala & Kurukshetra, Karnal and Bulandshahr. Company has recently got entry into Gurgaon to lay infrastructure.
However, the areas near to Delhi i.e. Noida, Ghaziabad, Gurgaon will remain the key focused areas for the Company in near future also.
Many Positives for the Company
The Company in collaboration with a renowned market player in Iran has recently introduced retrofitting of CNG kit in 2-wheelers on pilot basis. If this becomes sustainable, then it would open new avenues of growth for the Company.
It is a Debt Free Company with good cash reserves supporting comparatively small equity .Company has been maintaining a healthy dividend payout of 20.10%. ICRA Limited (An associate of Moody’s Investors Service) has reaffirmed highest credit ratings of AAA (Stable) for term loan and A1+ for short term loan.
Government of India is clearly in favour of natural gas companies and plans to make huge investment for the development of domestic gas fields in India in the next 5-7 years. Further, India prioritises to become a natural gas based economy and is working to elevate the domestic production of the Gas.
The Company is operating in UP and Maharashtra through its Associates Companies namely Central U.P. Gas Limited (CUGL) and Maharashtra Natural Gas Limited (MNGL).CUGL is engaged in City Gas Distribution in the cities of Kanpur, Bareilly, Jhansi and Unnao in Uttar Pradesh. CUGL achieved a gross turnover of Rs. 240.52 Crores and profit after tax of Rs. 48.37 Crores for the financial year ended March 31, 2017.MNGL is in City Gas Distribution business in Pune, Pimpri, Chinchwad, Chakan,Talegaon and Hinjewadi in the State of Maharashtra. MNGL achieved a gross turnover of Rs. 531.16 Crores and profit after tax of Rs. 76.29 Crores for the financial year ended March 31, 2017.
Targets for coming future
This company has already generated excellent return in past few years and the best is yet to come. Currently stock is trading at 295-296 level fall down from 340 levels and can be considered as good entry level. The stock is currently under a long term bull run and we expect that the stock will continue its journey to northward. 1 year target for the stock can be 400 and it may touch 520 levels in two years.
One should do his own research and study before taking any investment call.
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