What prompted me to do analysis of Indraprastha Gas share price?
I noticed during my study of stock market in general that S&P BSE Utilities Index is trading very close to its 52W Low levels.
Out of the major companies listed in S&P BSE Utility index, Indraprastha Gas was ranked 6th in terms of Market capitalisation.
Moreover, glancing roughly at its balance sheet and profit and loss accounts of the company, it looked encouraging.
Hence I decided to do a deeper fundamental analysis of Indraprastha Gas using my stock analysis worksheet.
About Indraprastha Gas:
Indraprastha Gas is the only supplier which provides Compressed Natural Gas (CNG) to the NCR Delhi region.
It provides CNG to automotive refilling stations, PNG (Pipes Natural Gas) to households, hotels, restaurants etc.
Mr. S.Ramesh is the Chairman of the Board of Indraprastha Gas. He is also in the Board of Directors of BPCL as Director (Marketing).
Mr. E.S. Ranganathan is the Managing Director of Indraprastha Gas. Earlier he worked as whole time director of GAIL (India).
Indraprastha Gas came into existence in 1998. It was a joint venture between GAIL and BPCL, who are also their major shareholder/promoters.
The shareholding of GAIL and BPCL is as below:
- GAIL (India) Ltd: 22.5%
- BPCL : 22.5%
In last five years, the shareholding of GAIL and BPCL has remain unaltered.
Short term price movement of Indraprastha Gas
In last 30 days, Indraprastha Gas share price has dropped from Rs.334 to 290 levels. This is a drop of 13.2% in just 1 month.
This is a sudden price drop and may have caused its shares to trade at levels close to its intrinsic value.
I want to include this stock in my watch list for 3 reasons:
- It works in a Sector (Utility) whose demand is only going to go up in India in next years.
- This sector (utility) is currently trading weak. Hence it is more likely to pick good stocks here at undervalued price levels.
- Overall glance on the companies financial reports says that, the company has strong fundamentals.
Now the only thing that remains to be done is:
- Detailed fundamentals analysis, which also includes
- Estimating intrinsic value of this stocks.
If current price of this stocks is anywhere close to its intrinsic value, it becomes very interesting.
This is a GOI enterprise. Hence I find it more comforting to invest in a GOI company which also has strong business fundamentals.
There is one more reason which is dragging me towards Indraprastha Gas. Indian stock market is going for a possible correction. This will further make Indraprastha Gas share price cheaper.
These are my findings about Indraprastha Gas share price analysis:
Download PDF Copy – Share_Price_Analysis_IndraprasthaGas.pdf
#1. Growth Rates:
I personally like stocks which show’s consistent growth in its past.
It becomes particularly interesting for me when I see a double digit growth rates. Indraprastha Gas provides just that for me.
The financial parameters that like seeing grow in a stock are as below:
- Free Cash Flow Growth
- Reserves Growth
- Income Growth
- Profit Growth
- Dividend Growth &
- EPS growth (my favorite)
I use my stock analysis worksheet to quantify all these values. This is the result for Indraprastha Gas:
Download PDF Copy – Share_Price_Analysis_IndraprasthaGas.pdf
#2. Financial Ratios
The use of financial ratios helps users to comprehend the numbers easily. It helps to compare apple to apple.
Financial ratios also helps us to make the first impression about the stocks, before digging into the details.
The ratios that my worksheet highlights prominently are as below:
- Price Valuation
- Price to Earning Ratio (P/E)
- Price to Book Value Ratio (P/B)
- Price to Sales Ratio (P/S)
- Price to Free Cash Flow (P/FCF)
- Profitability
- Return on Equity (ROE)
- Return on Capital Employed (RoCE)
- Cash Returned on Invested Capital (CROIC)
I use my stock analysis worksheet to quantify all these values. This is the result for Indraprastha Gas:
Download PDF Copy – Share_Price_Analysis_IndraprasthaGas.pdf
#3. Important Miscellaneous Data
Before investing, it is important to look at a few indicators that gives a rough idea about the current position of the stocks price.
What are these few indicators?
- Current price compared to its 52W high and Low price.
- How much the price changed in last 30 days and 12 months.
- What is the market cap.
- Compared to the Industry P/E, what is the P/E of stock.
- What is the price growth in last 3Y, 5Y and 10Y.
- What is the average dividend yield in last 3Y, 5Y and 10Y.
I use my stock analysis worksheet to get quick answers to these questions.
This is the result for Indraprastha Gas:
Download PDF Copy – Share_Price_Analysis_IndraprasthaGas.pdf
#4. Price Chart of Last 10 Years
Why I like to see price chart?
Frankly speaking price charts tell very less about a stock (unless you are a technical analyst).
But I still like to give it a glance. Why?
It gives an idea of how the current price is placed compared to last 10 years trend.
There can be few scenarios here:
- If price is only bullish – current price can be overvalued.
- If Price is remaining modest – poses a question why price is not growing fast enough?
- When price is falling – current price can be undervalued or business fundamentals may be weakening.
I use my stock analysis worksheet to generate the 10 Year price chart.
This is the result for Indraprastha Gas:
Download PDF Copy – Share_Price_Analysis_IndraprasthaGas.pdf
#5. Quarterly Trends
Why to look at quarterly results?
For long term investors, long term trends are more valuable.
But it is also essential that the investor should not miss noting the short term trends.
If in short term term, the income, earnings are falling, it poses a risk.
Investor must get the answers for the Why’s before proceeding.
The quarterly trends that I refer are as below:
- Total Income – TTM data verses last FY data (if rising or falling).
- Net Profit – TTM data verses last FY data (if rising or falling).
- Earning Per Share (EPS) – TTM data verses last FY data (if rising or falling).
I use my stock analysis worksheet to get pictorial chart for the above important informations. This is the result for Indraprastha Gas:
Download PDF Copy – Share_Price_Analysis_IndraprasthaGas.pdf
#6. What is the Intrinsic Value of this stock?
This worksheet may not be accurate, but it attempts to estimate Intrinsic value of stocks.
I believe that, even if it is a rough estimation of intrinsic value, it is still worth doing it.
Because investing in a stock without comparing its intrinsic value with its current price is a big mistake.
Based on the knowledge that has been gathered, this worksheet attempts to estimate the intrinsic value of its stock.
There are several ways to estimate intrinsic value of a stock. But I rely more on the following methods.
I have incorporated all of my favourite method in my worksheet to estimate intrinsic value of stocks.
An intelligent formula the generates the net intrinsic value of the stock derived from all these individual methods:
- DCF method
- NCAPS method
- Absolute PE method
- Reproduction cost method
- Benjamin Graham’s Formula
- Earning Power Value (EPV)
I use my stock analysis worksheet to estimate intrinsic value of stock.
This is the result for Indraprastha Gas:
Download PDF Copy – Share_Price_Analysis_IndraprasthaGas.pdf
#7. What is the final conclusion?
After considering almost all aspect of stocks as discussed above, my worksheet helps its user to arrive at a final conclusion.
What is the ultimate question in stock investing? The stock is good or bad? How to arrive at this conclusion?
My stock analysis worksheet does this very nicely for me. Based on the following parameters, it generates an overall grade for its stock.
If the generated grade is above 85%, the stock is considered good.
Lets see what grades are generated for Indraprastha Gas:
- The Overall grade for Indraprastha Gas is 90.7%.
- The market price of Indraprastha Gas seems to be priced slightly higher. But it scores 77%
- In terms of future growth prospects, Indraprastha Gas gets 100%.
- Indraprastha Gas earns a good 100%for its managements efficiency.
- In terms of profitability, Indraprastha Gas scores again a good, 78%.
- Financial Health of the company is decent at 88%.
- There is no bankruptcy threat to Indraprastha Gas. It earns 100%
It must be noted that, this worksheet gives more importance to the price valuation of stock. A stock which is priced right will score higher.
This worksheet gives score to its stocks very defensively.
There are not many stocks in the market that can earn grade above 80% from this worksheet.
This is one reason why, I can say that Indraprastha Gas looks to be a good stock.
