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Citi Maintains a BUY on Indraprastha Gas

June 7, 2007

Citigroup in a research report released just a while ago has maintained a BUY on Indraprastha Gas with a price target of Rs 156. Indraprashta Gas is expected to record a 21% annual growth between 2006-09.

Citi projects growth in PNG penetration, with renewed focus as compliance-led skew toward CNG should moderate; (2) regulatory upside potential, with the Delhi government mandate for conversion of new LCVs to CNG; (3) geographical growth in the National Capital Region; and (4) discretionary demand growth.

Indraprastha Gas is expected to report an EPS of Rs 9.18 and Rs 11.06 for FY07 and FY08 respectively. On DCF model Citi recommends a BUY with a price target of Rs 156. Target price for IGL is also based on a Price/Cash Earnings of 11.1x FY07E.

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