Jefferies downgrades Indraprastha Gas, cuts target price after Delhi EV policy GPL-NEWS

Source : business today

After the Delhi government approved the electric vehicle policy for cab aggregators and delivery services, Jefferies India downgraded Indraprastha Gas Ltd (IGL) to ‘hold’ from ‘buy’ and lowered its target price.

Jefferies has lowered its target price by 3% to Rs 465 per share.

from its previous target price of Rs 565 per share, which came after it projected that IGL volumes might be negatively impacted by 30% starting in FY25.

Since the NCR accounts for 88% of IGL’s volume, the slowdown in the NCR is unlikely to be compensated for by additional general advisories (GAs).

Because of the growing risks associated with EVs, it downgraded FY25/26 EPS by 7-9 percent and decreased the valuation multiple.

About 30% of these volumes come from taxi aggregators, the biggest contributors being Uber, Ola, and e-commerce delivery services.

“We have lowered our volume growth expectation for FY24–26 to 3%, 6%, and 6%.
Unit EBITDA margins at the top range of management forecast are what we have assumed.
As of right now, our FY25/26 PAT is eight or fifteen percent below consensus.

The Jefferies analysis stated, “We reduced the forward PE multiple to 16x to account for the growing EV threat.”

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