Indraprastha Gas Limited (IGL) shares rose more than 6% after UBS upgraded the stock to 'buy' from 'sell', lifting the target price to Rs 700 per share from Rs 400. The brokerage underlined IGL's solid near-term fundamentals, which are supported by potential inorganic growth prospects.
UBS anticipates IGL's volume growth to accelerate, rising from 4% year on year in FY24 to 8.2% compound annual growth rate (CAGR) between FY24 and FY27.
Infrastructure expansion and entrance into new areas are key drivers of this growth, according to the business. UBS stated that prospective mergers and acquisitions, which have not yet been incorporated into the price, might increase value even more.
Meanwhile, Mahanagar Gas Ltd (MGL) shares rose almost 6% to a 52-week high as UBS maintained its 'buy' recommendation on the firm but boosted the target price to Rs2,400 per share from Rs1,600 before. The brokerage stated that both organic and inorganic volume growth may continue to outperform estimates.
UBS boosted its overall volume predictions for FY25-27 by 7-11 percent, citing infrastructural improvements and CNG fleet expansion. Furthermore, it has increased its FY25-27 EBITDA per SCM outlook by 6-11 percent to Rs12.1-12.3/scm, taking into account MGL's pricing plans. Potential M&A prospects have not yet been considered in this study.
At 10:37 a.m., IGL stock was trading 5.4 percent higher at Rs 558.90 on the NSE, while MGL was up 6.3 percent at Rs 1,936.65. So far this year, the equities have soared by 33 and 60 percent, respectively, beating the Nifty's 16 percent return. IGL has increased by 19% during the last 12 months, whereas MGL has increased by 83%. In comparison, the Nifty gained by 28% over the same time period.
