Indraprastha Gas (IGL)

FairStock Score: 79/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 1/1

Key Financials

Strengths

• Near-monopoly city gas distribution network in the Delhi NCR region with promoter holding at 45%
• Extremely low leverage: debt-to-equity of 0.01 and Piotroski F-score of 8/9
• Strong capital returns: ROE of 15.68% and ROCE of 20.85%
• Long-term growth record: 5-year revenue CAGR of 24.75% and latest sales growth of 9.95%
• Positive free cash flow of ₹680 Cr and dividend yield of 2.49%

Concerns

• Profit growth is down 15.42%, showing margin pressure despite revenue growth
• Current price of ₹165.55 is above the Graham Number of ₹142.37, implying a negative margin of safety
• DCF intrinsic value of ₹190.75 offers limited upside from the current price
• The negative EV/EBITDA of -79.81 needs careful interpretation, though the balance sheet appears very conservatively run

AI Analysis

Indraprastha Gas is exactly the sort of franchise I would sit with over a cup of coffee: essential service, protected territory, and a balance sheet that would make Graham smile. The company has built a city-gas distribution network in and around Delhi, where households and auto drivers do not switch suppliers lightly. That is a durable moat. At ₹165.55, the market cap is ₹23,920 Cr; P/E is 14.37 and P/B is 2.18. Returns are solid: ROE 15.68%, ROCE 20.85%, and debt-to-equity is just 0.01. With free cash flow of ₹680 Cr and a Piotroski F-score of 8/9, the financial health is strong despite a difficult year. The 9.95% sales growth and 24.75% five-year revenue CAGR show the natural gas penetration story is intact. However, profit declined 15.42%, a reminder that regulated tariffs and input costs can squeeze margins. Graham's number is ₹142.37, so the current price leaves a margin of safety of about minus 20%. Even a DCF value of ₹190.75 suggests only modest upside. At 14.37 times earnings, with a 2.49% dividend yield, you are paying a fair price for a quality business, not a bargain. I would not chase it. I would wait for a wider gap between price and conservative intrinsic value. If the company can restore profit growth while continuing to expand its network, this remains a solid holding. But for a new purchase, patience is required. Price is what you pay, value is what you get.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer