Stock Tips - Indraprastha Gas

Stock Tips of Indian stocks

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Stock/ Company: Indraprastha Gas Recommendation: Buy
Date: 22nd July 08
Face value per share: Re 10
Current Market Price : Rs 109 as on 21st July 08
Target Market Price : Rs 160 in 12 – 18 months

Business description: Indraprastha gas ( IGL ) is promoted by GAIL, BPCL and the Government of Delhi. IGL is in the business of Compresses Natural gas ( CNG ) retailing for automobiles and Piped Natural Gas ( PNG ) retailing for the citizens of the National Capital region ( NCR ). The company is performing well and is growing at a CAGR of 15 - 20% for the last several years. The consolidated business turn over in 2007 – 08 ( March end ) is Rs 706 Cr. This stock tip is a good tip for medium to long term

Positives/ Strengths/ Opportunities for this share:-
- The company operates in a huge untapped market segment of retailing CNG and PNG with huge growth prospects .
- IGL has currently 163 CNG stations and 150 KMs of pipelines in the NCR. And it continues to invest in infrastructure to increase these numbers.
- The commonwealth games is scheduled in NCR by 2010 and the government is planning to introduce 2000 buses and 20000 taxis to run on eco firendly fuel.

Negatives/ weakness/ threats for this share:
- Entry of several other new players due to the attractiveness of the business.

Summary:
Company year ends on: Turn over 08=Rs706 Cr,09E = 805 Cr,10E =Rs 926 Cr
Turn over – expected Compounded Annual Growth Rate CAGR ( 08 – 10 ) = 15 %
Net profit 08 = Rs 174 Cr – expected Compounded Annual Growth Rate CAGR ( 08 - 10 ) = 20%Earning Per Share expected on FV of Rs 10/- ( 08,09,10 ) = Rs 12.5, Rs 13.5, Rs 16
Discounts 2009 estimated eps by a measly 8 times and 2010 eps by 7.4 times
Return on Equity ( 09 E ) = 28%, Return on Capital Employed (09E ) = 39%
This stock tip is a Buy for a minimum of 50 % gain over a 12 to 18 month period
-------------------------------------------------------------------------------------------------Disclaimer: Investment in shares are subject to market risks. This is a free advice given to the readers and the readers shall consult their financial advisors before making an investment. The author may or may not have this stock in his portfolio. The readers indemnify the author against any or all damages including loss of their invested money