Indraprastha Gas Earns Higher Revenues In Q1FY14

Indraprastha Gas (IGL), which supplies CNG and PNG in Delhi and the rest of the national capital region, has posted its June quarter FY14 result. The company posted a healthy growth of 19% in its revenue (due to the increase in the sales of natural gas), which touched Rs 903 crore. The other operating income for the company stood at Rs 1.24 crore.

There was a rise in the purchase of natural gas in this quarter. The expenses for this purchase (making up almost 84% of IGL's overall expenses) increased by 22% in this quarter. Following this, the company's operating expenses jumped to Rs 708 crore, also a 22% rise over the year-ago figure of Rs 581 crore. In line with this, the other expenses too increased by 10% to Rs 99 crore. The expenses on workforce grew to Rs 15 crore as compared to Rs 12 crore in the corresponding period last year.

On the income side, the growth in sales of natural gas has boosted the operating income to Rs 194 crore, marking a growth of 8% on a yearly basis. In contrast, the increase in depreciation cost and tax expenses paid by the company has brought down its net profit. The earnings before tax expenses have growth by 8% but the net profit went up by a moderate 3% to Rs 88 crore.

The increase in operating expenses has also hit the operating margins by 215 basis points to 21.48%. Along with this, the company has reported a decline in its finance expenses. IGL's net margins declined by 148 basis points to 9.7% due to the increase in tax expenses.

The company has a strong presence in the natural gas segment and is also exploring its other locations like Noida, Ghaziabad, etc. In addition, the continuous rise in petrol and diesel prices will benefit the company by creating more demand opportunity. The company is also in the process of adding new stations to increase its compression capacity. Hence, we recommend remaining invested in this counter.