A company is said to be “fundamentally strong” when it portrays some specific characteristics, some of which include strong and consistent financials, low debt-to-equity ratio, and many more.
Listed below is one such fundamentally strong stock that is engaged in the ‘Gas Distribution’ business:
Indraprastha Gas Limited
With a market capitalization of Rs 33,000 crores, the shares of Indraprastha Gas Limited (IGL) are currently trading at Rs 471 slipping around 0.60 percent as compared to the previous close of Rs 473.65 apiece.
Having a look at the most recent performance of the company, the basic operational indicators such as the operating revenues and after-tax profits moved in opposite directions.
The operating revenues, on one hand, reduced from Rs 4,062 crores during the March 2023 quarter to Rs 3,762 crores during the June 2023 quarter, and, the net profits, on the other hand, moved up from Rs 398 crores to Rs 522 crores.
Comparing Q1FY22-23 with Q1FY23-24, the operating revenues as well as after-tax profits have increased with the former moving up from Rs 3,530 crores to Rs 3,762 crores and, the latter, during the same time horizon, increasing from Rs 481 crores to Rs 522 crores.
The profitability ratios saw marginal increments with the return on equity (RoE) moving from 19.80 percent during FY21-22 to 20.67 percent in FY22-23, and, the return on capital employed (RoCE) moving from 21.81 percent to 22.40 percent.
One of the developments that took place in the company is the incorporation of a Joint Venture (JV) company between IGL (51 percent) and Genesis Gas Solutions Private Limited (49 percent) to set up Integrated Smart Meter Manufacturing Plants.
ICICI Securities gave a ‘Buy’ recommendation for the stock with a target price of Rs 615 indicating a potential upside of around 31 percent as compared to the prevailing stock prices.
The rationale behind providing such a recommendation is pertaining to the favorable gas costs, maintaining strong margins, etc.
Indraprastha Gas Limited (IGL) is a utility company based in India that derives a majority of its revenue from the sale of natural gas which is majorly done in the form of compressed natural gas (CNG). The company supplies CNG to the ‘Transport’ sector and piped natural gas (PNG) to customers involved in various sectors such as the commercial and industrial sectors.
Written by Amit Madnani
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