Indraprastha Gas Limited Q2 FY24 Earnings Conference Call Insights

Key highlights from Indraprastha Gas Limited (IGL) Q2 FY24 Earnings Concall

• Business Performance
  • Recorded highest ever quarterly profit of INR535 crores, up 29% YoY.
  • Sales volume at 8.3 MMSCMD, up 3% YoY.
  • EBITDA at INR656 crores, up 24% YoY.
  • PBT at INR686 crores, up 26% YoY.
  • Gross profit per SCM increased 11% YoY to INR14.12.
  • EBITDA per SCM increased 21% YoY to INR8.60.
• Delhi EV Transition Policy Impact on IGL
  • The scheme requires 50% EV share in new purchases in 3 years and 100% in 5 years.
  • All fleets to switch to EVs by April 2030.
  • 60-65% of IGL’s CNG sales from Delhi.
  • This is estimated to impact around 15% of IGL’s volumes over the long term.
  • IGL targeting interstate bus transport and long haul LNG transportation as key growth sectors to mitigate the effects of the EV policy.
  • Targeting conversion of dumper fleets in new GAs like Hamirpur, Banda, Mahoba.
  • Expects additional CNG demand from interstate buses over next 3-4 years.
• Business Segment Growth
  • Domestic P&G up 15% YoY.
  • Commercial P&G up 12% YoY.
  • Degrowth of 5% in industrial P&G due to lower alternate fuel prices.
• Regional Growth Trends
  • Delhi CNG sales grew around 3% YoY.
  • NCR; Gurugram, Ghaziabad grew around 5%.
  • Newer GAs grew 30-60% on lower base and have relatively lower contribution currently.
  • Enterprise growth moderated due to global players deferring spends.
  • Accelerating growth in domestic enterprise business with focus on managed services.
• IGL Volume Growth
  • Current volumes around 8.5 MMSCMD.
  • Expects to exit FY24 at 9 MMSCMD, in line with previous guidance.
  • Growth next year depends on EV policy impact, but expect 8-9% growth in passenger vehicles and non-aggregator segments.
• Reducing CNG Queues
  • Significant queuing and congestion at CNG stations.
  • IGL working to reduce this through new stations.
  • Continuing investments in Delhi infrastructure.
• CNG Vehicle Conversion Trends
  • Monthly conversion was 15,900 in Q2FY24, 15,361 in July, and 17,131 in August.
  • The company expects the conversion numbers to continue to grow in the future.
• CNG Volumes and Demand
  • Adani and Haryana Gas volumes continuing for now.
  • Increased vehicle registrations positive but too early to quantify impact.
  • Average vehicle replacement cycle around 8-10 years.
  • Demand historically higher when price gap was larger.
  • Balanced approach currently on pricing but can reduce spread to stimulate demand if required.
• Future Capex Allocation
  • Plan to moderate INR1,400-1,500 crore annual capex guidance due to upcoming aggregator policy impact.
  • Open to inorganic growth opportunities post change of control period ending in 1-2 years.
• Delhi’s EV Policy Response
  • Not concerned about policy impact until EV ecosystem develops further.
  • Cost, lack of charging infra remains barriers to mass EV adoption currently.
  • IGL expanding into EV charging/battery swapping; pilot project underway.
  • No slowdown in IGL’s infrastructure expansion plans despite EV policy.
• Volume Guidance
  • Expect to exit FY23 at 9 MMSCMD, growth of 1.5 MMSCMD over next 18 months.
  • Growth driven by NCR region, passenger vehicles, LCVs.
  • Focusing on interstate buses; already supply to some Uttarakhand, UP govt. buses.
  • Infrastructure expansion continuing, targeting 100+ new stations this fiscal.
  • Floods, G20 summit delayed some permits and approvals for new stations in Delhi.