Motilal Oswal sees 27% upside in Indraprastha Gas despite Delhi EV-policy risk
Motilal Oswal retained its Buy call on Indraprastha Gas with a Rs 195 target, arguing that gas-cost relief and faster growth beyond Delhi can offset gradual EV disruption. It estimates three-wheeler electrification could reduce CNG volumes by about 0.6% annually.
What happened
Indraprastha Gas (IGL) · Motilal Oswal retains Buy on Indraprastha Gas with a Rs 195 target, citing easing gas-cost pressure and strong expansion beyond Delhi.
Key facts
- Buy target price: Rs 195/share
- Implied upside: 27%
- Share correction: about 10% over four months
- Brent crude: $93/barrel in H1 FY27 vs $69 in FY26
- Rupee: about Rs 95/USD vs Rs 88.4/USD
- Q1 FY27 EBITDA margin: Rs 3.4/scm
- CNG price increase: Rs 3.9/kg
- Estimated EBITDA benefit: Rs 1.4-1.5/scm
- Estimated CNG volume impact from 3-wheeler electrification: 0.6% annually
- 3-wheelers: around 6% of CNG volumes
- Ex-Delhi NCR volume growth: over 20% YoY
- Ex-Delhi NCR share of total volumes: 15-20%
- Ex-Delhi NCR contribution to incremental sales: nearly half
- Delhi passenger-vehicle CNG volume growth excluding buses: around 11% YoY
- FY26-FY28 volume CAGR estimate: 7%
- FY26-FY28 EBITDA and PAT CAGR estimate: around 14%
- Valuation: around 9x estimated FY28 earnings
- Target valuation: 13x Dec 2027E SA P/E
- JV value: Rs 44/share
Why this matters
IGL’s expanding footprint outside Delhi NCR strengthens the strategic case for regional growth investments and partnerships that diversify exposure to Delhi’s EV-policy transition.
What to watch
- Final Delhi EV Policy 2.0 mandates, subsidy structure, vehicle replacement deadlines and any restrictions on new CNG three-wheeler registrations.
- Monthly CNG sales volumes in Delhi versus newer operating geographies.
- Three-wheeler, taxi and last-mile delivery fleet EV registration trends.
- Domestic administered gas allocation, spot LNG prices and IGL's reported gross margin per scm.
- CNG station additions, PNG connection growth and capex intensity outside Delhi NCR.
- Evidence that EV charging density and battery-swapping economics are improving enough to accelerate commercial-fleet conversion.
- Accelerate CNG station rollout and dealership partnerships in non-Delhi NCR markets to diversify vehicle-fuel exposure.
- Prioritize PNG connections for commercial, industrial and residential customers, where electrification substitution is slower or economics remain favorable.
- Increase exposure to CBG, LNG and potentially EV-adjacent mobility services at existing fuel sites to protect station utilization.
- Use gas-cost relief to defend CNG price competitiveness versus petrol, diesel and electricity rather than maximizing near-term price spreads.
- Target fleet operators, logistics companies and intercity transport segments that face slower electrification than urban three-wheelers.