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.