#EBITDA #MARGIN

In FY24, the EBITDA margin expanded by 230 bps YoY to 15.3%. In Q3 FY24 and Q4 FY24, the company witnessed margin contraction QoQ due to lower allocation of APM gas. APM gas allocation is expected to decline from current level as domestic production is not keeping pace with commissioning of new GA’s. This will impact the margin in the near term. The company’s purchase of stock in trade of natural gas constitutes 75% of the total expenses followed by other expenses 12%, excise duty 11%, and employee benefits expense 2%. In H1 FY25, the EBITDA margin contracted by 316 bps YoY to 14%.

#PAT #MARGIN

In FY24, the PAT margin expanded by 174 bps YoY to 10.6%. The effective tax rate during the year stood at 25.4% as compared to 25.8% in FY23. In H1 FY25, the PAT margin contracted by 232 bps YoY to 9.6%. LNG (liquefied natural gas) business has better margins than CNG business because there is no excise duty component in LNG.

#Management

The management is targeting to open 100 LNG stations in next 5-6 years. Of the total sales volume, it is expecting LNG volume contribution of ~20%-25% in 5 years from now. • In FY25, it plans to set up 90 CNG stations of which ~10-12 station would be set up in Delhi region and rest outside Delhi region. • IGL is also exploring the possibilities of putting up green hydrogen generation plant for blending with natural gas for which a detailed feasibility study has been carried out by a leading consultant and a detailed assessment of green hydrogen project is being carried out with subject matter experts. • The company is increasing its footprint in electric vehicle (EV) charging stations. within 5 years from the notification date. By April 1, 2030, all aggregators must have an all-electric fleet. Delhi Government. • The Delhi government has proposed an EV transition policy for cab aggregators, delivery services, and e-commerce companies. This policy requires a gradual shift to electric vehicles, with 50% of new purchases being electric within three years and 100% • The company expects some impact in the CNG sales volume in Delhi over the long run due to EV transition policy for cab aggregators. Currently ~15% of the total volume comes from Delhi cab aggregators. Going ahead, lesser addition of new CNG vehicles by aggregators would impact the sales growth in this segment in the coming years. • In FY23, the volume from DTC buses was 3.1 lakh kg per day. It reduced to 2.5 lakh kg per day in Q1 FY24 and 1.5 lakh kg per day in Q1 FY25. In the next 2-3 years, the management expects the volume from DTC would cease to exist due to the stated policy of Delhi Government

#FUTURE #PLAN

• The company had started laying pipeline in new geographical areas, i.e., Banda, Mahoba and Chitrakoot districts in the state of Uttar Pradesh (UP). It is also expanding its network in the existing geographical areas, i.e, Ajmer, Pali, Rajsamand, Muzaffarnagar, Meerut, Shamli, Karnal and Kaithal. New pipeline network in Ajmer, expansion of pipeline in Muzaffarnagar, Shamli, Karnal and Kaithal would increase the volume going forward. • The company would expand its pipeline in new geographical areas, i.e., Banda, Chitrakoot, Mahoba, Kanpur, Fatehpur, Hamirpur, Ajmer, Pali, Rajsamand, Karnal and Kaithal. • The company is targeting to close FY25 with sales volume of ~9.5 mmscmd with increased focus on growth in CNG volumes as well as industrial segment. • They envisage Ajmer GA to contribute significantly to volumes in the next 2 years. • The management expects EBITDA/scm to remain at ~₹6/scm-₹7/scm in FY25. • The management is targeting growth of ~10%-12% in next 5-6 years. The growth would be supported by liquefied natural gas business. • It anticipates the commercial, PNG and industrial segments would grow by ~15% in FY25 while the CNG segment to grow by ~10%-15%. Delhi would grow by ~4%-5%. • The company is planning to set up 10 LNG stations in near future. It sees potential of LNG to replace long haul vehicles currently running on diesel. In addition to this, the company is working on conversion of dumpers and commercial trucks in its geographical areas. The company plans to commission 3 new LNG station by the end of this year. • In FY25, it plans to commission 10 CBG (compressed bio-gas) plant. The capital expenditure would be ~₹300-₹350 cr for 10 CBG plants.

#SECTORIAL #POTENTIAL

• Natural gas is the cleanest fossil fuel among the available fossil fuels. However, it currently makes up only 6.7% of all energy consumed in the country. Gas as clean fuel has been given a top priority and Indian government wants to make the Indian economy as a gas-based economy. In this regard, the government is targeting its share to rise to 15% by 2030. • The government has taken steps to increase indigenous production, creating pipeline infrastructure throughout the country and increasing the capacity of liquefied natural gas (LNG) terminals. Other initiatives like LNG corridor along golden quadrilateral and expansion of City Gas Distribution (CGD) network in the entire country are likely to boost natural gas demand in the country. • CGD networks are being expanded with coverage of around 70% population and 50% area of the country till 10th round of bidding by Petroleum and Natural Gas Regulatory Board (PNGRB) with massive investment plans. In order to promote the development of CGD network, the Government has accorded priority in domestic gas allocation to PNG (Domestic) and CNG (Transport) segments. • The government has also taken up initiatives for the expansion of the city gas networks by opening up ‘Make in India’ market for ancillary equipment needed for piped natural gas to households and refueling CNG vehicles. • The government offer various incentives to make electric vehicles more affordable. This may pose a threat to growth in CNG demand in the medium to long term. • The union cabinet had decided to index the administered price mechanism (APM) prices of gas to the price of imported crude oil. APM will be priced at 10% of the price of a basket of crude oil that India imports. The rate is, however, capped at $6.5 per million British thermal units, with a floor price of $4 per mmBtu. The minister further informed that these caps and floor prices will remain the same for two years and will increase by $0.25 per mmBtu per year thereafter.

Indraprastha Gas Limited IGL 335-395
Expected level 500
Support 294

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Ambuja Cements Limited 500-545
Expected level 680
Support 380

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ICICI Securities Company Research Report

ICICI Securities was incorporated in 1995 is a subsidiary of ICICI Bank Ltd. It is an integrated technology-based platform which operates www.icicidirect.com, a virtual financial supermarket, meeting the three need sets of its clients - investments, protection, and borrowing through its four lines of businesses - broking, distribution of financial products, wealth management, and investment banking. I-Sec serves customers ranging from the retail and institutional investors to corporates, high net-worth individuals, government. The company’s product portfolio is spread across retail and institutional broking, distribution of third-party products such as mutual funds, life insurance, fixed deposits, loans disbursements, and wealth management services, amongst others. As on 31st March 2024, the company serves ~1 cr clients. They have a NSE active client market share of 3.9% as on 30th September 2024. The company operates its business via three operating segmentsBroking & Commission - This business segment consists of equity, currency & derivative brokerage services, the distribution of thirdparty products, research, and fees from financial planning/education, interest on bank fixed deposits held by exchanges as margins for the brokerage business, interest on trade receivables from brokerage business, interest on margin funding, and income derived from the trading of securities by the broking and commission business. Advisory Services – This business segment consists of equity capital markets services and financial advisory services that cater to corporate clients, the government and financial sponsors. Investment & Trading – This business segment consists of treasury and proprietary trading activities. Income from this segment includes income derived from the trading of securities and interest received on investments for company’s own account. The board approved the delisting of the company via share swap deal, that would make ICICI Securities a wholly owned subsidiary of ICICI Bank subject to requisite approvals.

#SALES #GROWTH 5 Year CAGR 24.3%

In FY24, the company reported a growth in net sales of 47.8% to ₹5,049 cr. This was on account of ~50% growth in the broking income led by increase in retail ADTO both in derivative & cash market and higher block deals from institutional business. Interest income grew by 67% YoY, on account of increase in the MTF book and fixed deposits book. Income from services grew by 30% YoY, primarily on account of increase in issuer services & advisory fee income and income from distribution products. In H1 FY25, the company reported a growth in net sales of 53.3% to ₹3,347 cr. This was on account of ~49% growth in the broking income led by increase in retail ADTO both in derivative & cash market and higher block deals from institutional business. Interest income grew by 75% YoY, on account of increase in the MTF book and fixed deposits book.