IGL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.9

📊 Financial Overview: Indraprastha Gas Ltd (IGL) maintains a solid financial foundation with a ROCE of 20.8% and ROE of 15.7%, indicating efficient capital deployment. The company is virtually debt-free with a debt-to-equity ratio of 0.01, enhancing its financial flexibility. EPS stands at ₹10.2, and the P/E ratio of 20.8 is slightly above the industry average of 19.9. However, the PEG ratio of 6.18 suggests overvaluation relative to growth. PAT declined slightly QoQ from ₹349 Cr to ₹356 Cr, reflecting a -11.3% profit variation. The stock is trading near its 50 DMA (₹211) and 200 DMA (₹210), indicating technical stability.

💼 Business Model & Competitive Edge: IGL is a leading city gas distribution company, supplying CNG and PNG across Delhi-NCR. Its strong infrastructure network, regulatory support, and rising demand for cleaner fuels provide a durable competitive advantage. The company benefits from urban expansion, government push for green mobility, and long-term contracts with upstream suppliers.

📉 Valuation & Entry Zone: With RSI at 50.4 and MACD at 0.07, momentum is neutral. The stock is down ~7% from its 52-week high of ₹229 and has rebounded ~38% from its low of ₹153. A favorable entry zone lies between ₹200–₹208, offering a reasonable margin of safety for long-term investors.

📈 Long-Term Holding Guidance: IGL is a stable long-term hold for investors seeking exposure to clean energy distribution. While growth is moderate and valuation slightly stretched, its strong fundamentals, low debt, and strategic positioning support steady compounding. Monitor volume growth, regulatory developments, and margin trends for sustained performance.

✅ Positive

• High ROCE (20.8%) and ROE (15.7%) reflect strong operational efficiency
• Debt-free balance sheet enhances financial resilience
• Dividend yield of 2.01% adds income stability
• FII and DII holdings increased

⚠️ Limitation

• PEG ratio of 6.18 suggests overvaluation
• QoQ PAT decline of 11.3%
• Volume below weekly average indicates reduced trading interest

📉 Company Negative News

• Profit contraction due to margin pressure and input cost volatility
• Stock trading ~7% below 52-week high

📈 Company Positive News

• Strong institutional interest with rising FII and DII holdings
• Government push for CNG adoption supports long-term demand
• Stable technical indicators suggest accumulation phase

🏭 Industry

• City gas distribution benefits from clean energy transition and urban expansion
• Industry P/E of 19.9 reflects moderate valuation
• Policy support and infrastructure investments driving long-term growth

🧾 Conclusion

IGL is a fundamentally strong clean energy distributor with high return metrics, low debt, and strategic relevance. While valuation is slightly stretched and earnings growth has slowed, its long-term outlook remains positive. Investors may consider accumulating near ₹200–₹208 for steady exposure to India’s clean energy transition.