We expected Q1 to be relatively muted for Indraprastha Gas (IGL) as typically, volume growth is muted (summer holidays). Also, we expected a negative impact of sharp rupee weakness. Reported numbers were largely in line. Ebitda of Rs 2.95 billion (+6% year-on-year, +1% quarter-on-quarter) was 4% ahead of our estimates, and PAT of Rs 1.76 billion (+9% y-o-y, 1% q-o-q) was 2% ahead. CNG sales of 273 million kg (+10% y-o-y, +7% q-o-q) were in line. In volume terms, CNG sales of 4.1 mmscmd were up 12% y-o-y and 4% q-o-q. In our view, high petrol/diesel prices (both at near-peak levels) continue to encourage switch to CNG. CNG volume growth should see a boost as Delhi-NCR finally sees long-delayed bus additions from H2FY19F. PNG volumes of 1.4 mmscmd were up 18% y-o-y.
Within PNG, industrial/ commercial volumes were particularly strong (up 29% y-o-y, 9% q-o-q). Part of this growth is driven by increased conversion to natural gas after a ban on petcoke and fuel oil in 2017-end. It was also driven by higher short-term intake of R-LNG by a few large customers (at lower margins). The total volumes of 5.5 mmscmd were up 13% y-o-y and 2% q-o-q. Per unit gross margin Rs 10.8/scm (vs Rs 11.1/scm in Q4), were in line. Ebitda margin was Rs 5.84/scm (vs adjusted Rs 5.7/scm in Q4) were marginally ahead of our estimates of Rs 5.7/scm. Reported Ebitda/scm in Q4 were higher due to one-off reversal of provisions. IGL’s share of Q1 profits at Central UP Gas and Maharashtra Natural Gas was `190 million (+6% y-o-y, +12 q-o-q).
For the ongoing ninth city gas distribution licensing round, regulator Petroleum and Natural Gas Regulatory Board (PNGRB) has announced the winners for 78 of the 86 geographic areas. IGL had bid for 11 and winners in nine of these areas have been announced. IGL has won one licence area which comprised districts of Meerut (excluding area already authorised), Muzaffarnagar and Shamli. Decision for Hissar (has 5 bids) and Jhajjar (14 bids) are pending. IGL’s 50% subsidiary MNGL has won three licence areas: 1) Ramanagra (Karnataka); 2) Sindhudurg (Maharashtra); and 3) districts of Valsad (excluding area already authorised), Dhule and Nashik (Maharashtra).
