During Q4FY08, IGL registered 14.1% y-o-y jump in net sales to Rs187.4 crore owing to sustained growth from both CNG and PNG segments, which was in line with our expectations.
CNG volumes went up by 12.3% y-o-y to 101.6mnkgs (90.5mnkgs), while PNG volumes were up 16.3% y-o-y to 12.1mmscm (10.4mmscm).
Overall sales volumes were up on the back of rise in CNG operative vehicles, additional CNG stations and PNG customers. However, CNG realizations remained flat at Rs19/kg while average PNG realizations were higher by 8% y-o-y to Rs17.7/kg due to the price increase towards early FY08.
The company has ambitious plans to expand its CNG stations coverage to nearby areas like Greater Noida and Noida in the National Capital Region. It also proposes to expand its PNG network in newer geographies in and around Delhi.
We believe the company will be able to deliver double-digit volume growth over the next couple of years. However, we remain doubtful over sustainability of high OPMs due to regulatory concerns, and IGL’s dependence on APM gas. Hence, we maintain NEUTRAL on the stock.