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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.
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