Release Date: January 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Indraprastha Gas Ltd (BOM:532514, Financial) reported a 41% year-on-year increase in PAT, rising from INR278 crore to INR392 crore.
- Sales volume grew by 4% year-on-year, reaching 8.48 MMSCMD.
- EBITDA increased by 32% year-on-year to INR564 crore.
- The company is focusing on LNG and CBG to improve volume and profitability, with plans to set up 10 LNG stations and 16 new CNG stations.
- Indraprastha Gas Ltd (BOM:532514) is planning to diversify into renewables and set up a small-scale LNG plant to utilize idle capacity at CNG stations.
Negative Points
- EBITDA per SCM declined from INR8.6 in Q2 to INR7.23 in the current quarter due to a decrease in APM allocation for the priority sector.
- The industrial segment lagged behind due to the price of alternate fuels, impacting overall sales.
- The company expects APM allocation to decrease further in the medium term, which could impact margins.
- There is a significant impact from the conversion of DTC buses to electric, which has already seen 40% of the fleet converted, affecting CNG sales.
- The company faces challenges in ramping up CBG volumes due to issues with feedstock availability and logistics.
Q & A Highlights
Q: How much was the APM allocation in the quarter? Can you provide the breakup of different sourcing of gas?
A: Total allocation was around 78% domestic APM and non-APM, 4% HPHT, making it 82%. The remaining 17% was from term contracts of RLNG and small volumes spot on IEX. (Kamal Chatiwal, Managing Director)
Q: How do you see APM allocation evolving over the medium term?
A: We expect the APM allocation to decrease further. Although there was a slight improvement from January 1, the overall trend is a decline due to more GAs being commissioned and domestic production not keeping pace. (Kamal Chatiwal, Managing Director)
Q: What steps are being taken to accelerate vehicle conversions, and is there a possibility of price cuts at the retail level?
A: We are focusing on new GAs and satellite towns of Delhi, reducing prices in some areas to make them more competitive. This strategy is helping to increase conversions. (Kamal Chatiwal, Managing Director)
Q: What are the plans to increase volume growth in other GAs?
A: We are targeting dumpers used for construction materials, especially in areas with limited daily transportation. Additionally, we are focusing on LNG for commercial segments and long-haul transportation. (Kamal Chatiwal, Managing Director)
Q: What is the expected volume growth for FY25?
A: We are targeting to close FY25 with an average volume of 10 MMSCMD. (Kamal Chatiwal, Managing Director)
Q: How are you addressing the decline in industrial segment sales due to alternate fuel prices?
A: We are rationalizing our pricing policy to be more flexible and customer-specific, aiming to maximize volumes by reducing S&D charges and margins. (Pawan Kumar, Director - Commercial)
Q: What is the strategy for CBG and LNG to mitigate the impact of EVs on CNG sales?
A: We are setting up 10 CBG plants and focusing on LNG stations. The goal is to absorb the decline in APM allocation with cheaper CBG volumes and secure lucrative long-term contracts as spot prices soften. (Kamal Chatiwal, Managing Director)
Q: What is the current mix of sourcing for gas, and how does it impact margins?
A: The mix includes 82% from APM and HPHT, 17% from RLNG term contracts, and small volumes from spot. The margin decline QoQ is mainly due to reduced APM allocation and holding prices unchanged in some areas. (Kamal Chatiwal, Managing Director)
Q: What is the impact of the Delhi EV policy on cab aggregator volumes?
A: We have not noticed a significant decrease in the number of cars and taxis being registered. The total vehicle population is around 15,000 per month, and we expect this to increase with new variants from OEMs. (Pawan Kumar, Director - Commercial)
Q: What are the plans for infrastructure spending and CapEx for the next year?
A: We plan to spend around INR1,400 crore to INR1,500 crore, focusing on CBG and LNG segments. This includes setting up LNG stations and CBG plants. (Kamal Chatiwal, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
