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The brokerage reportedly downgraded the stock from 'buy' to 'hold' and reduced its target price to Rs 465 per share. This downgrade came after the Delhi government announced its electric vehicle (EV) policy, which requires cab aggregators and delivery service providers to transition to EVs by 2030.
The policy sets a phased approach with targets of 5% EVs in their fleets within six months, 50% within three years, and 100% within five years. As IGL is primarily involved in supplying natural gas as cooking and vehicular fuel in Delhi NCR, this new EV policy is expected to impact the market for compressed natural gas (CNG), which is a competitor to EVs in the transport sector.
The decline in IGL's stock price had a cascading effect on other gas distributors, leading to a selloff in their shares as well. Mahanagar Gas (down 7.39%), Gail (India) (down 3.68%) and Gujarat Gas (down 1.27%) slumped.
IGL is an Indian natural gas distribution company established in 1998 as a joint venture between GAIL, Bharat Petroleum, and the Government of Delhi.
IGL reported 4% increase in net profit to Rs 438.40 crore on a 7% rise in net revenue from operations to Rs 3406.98 crore in Q1 FY24 as compared with Q1 FY23. Its total volumes rose by 4% to 746.19 million standard cubic metre (SCM) in Q1 FY24 from 717.84 million SCM in Q1 FY23. Of this, CNG volume added up to 561.42 million SCM (up 4% YoY) and PNG volumes aggregated to 184.77 million SCM (up 4% YoY).
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