The plan of Delhi Integrated Multi-modal Transit (DIMTS) to increase the number of buses is a big positive for Indraprastha Gas. This is because buses in Delhi are fuelled by compressed natural gas and Indraprastha Gas supplies this fuel.
The Delhi Government proposes to launch 1,000 additional buses by the year-end. Recently, the Chief Minister of Delhi, Shiela Dixit, said the total requirement of public transport buses stood at 11,000 buses and the Delhi Government is keen that the shortage is bridged.
The fact that Delhi will be pressing into service more and more buses, coupled with the fact that LNG prices are softening and the Indian rupee is appreciating, is good for Indraprastha Gas, the company’s management told analysts recently.
Analysts at Edelweiss Securities, who met the Indraprastha management recently, said the company is in a “sweet spot” because it has completed two years of capacity expansion and is now ready for the harvest. In 2010-11 and 2011-12, Indraprastha Gas invested Rs 680 crore each year in expanding its network in Ghaziabad and Greater Noida. “We believe the benefits of higher volume will gradually flow in,” says Edelweiss.
Indraprastha has guided further capital expenditure of Rs 450 crore in 2013-14.
IGL is a joint venture promoted by GAIL, BPCL, and the Delhi Government. Incorporated in 1998, the company has pioneered the commercialisation of CNG for the automotive sector in Delhi. IGL operates in two business segments — CNG and piped natural gas, or cooking gas supplied to homes and commercial and industrial establishments. The CNG business involves distribution of CNG to automobiles through gas stations. At the end of 2011-12, it was selling around 3.3 million cubic metres of gas a day.
In 2011-12, the company achieved a turnover of Rs 2,519 crore and net profit of Rs 306 crore. Each share earned Rs 21.89. In the first quarter of the current year, turnover was Rs 760 crore and net profit Rs 85 crore. On the BSE today, the Indraprastha Gas share opened at Rs 257.95.