In response to the recent approval of the ‘Delhi Motor Vehicle Aggregator and Delivery Service Provider Scheme’ by Chief Minister Arvind Kejriwal, the share price of Indraprastha Gas (NSE: IGL) experienced a significant dip on Friday. This new policy, which sanctions the operation of electrically-operated bike taxis and introduces regulatory measures for app-based aggregators and delivery services, elicited substantial trading activity on the National Stock Exchange.
Dubbed the “EV Policy 2.0,” this initiative awaits final clearance from Governor VK Saxena and mandates a shift towards green mobility in Delhi. It requires all cab aggregators, delivery services, and e-commerce entities operating in the region to transition to electric vehicles by 2030. The impending transition bears significant implications for traditional gas providers like Indraprastha Gas.
In light of these developments, Jefferies India downgraded IGL’s rating from ‘buy’ to ‘hold.’ Furthermore, the financial services company substantially lowered its target price for the gas distributor, reflecting the potential impact of the new policy on IGL’s future business prospects.
InvestingPro data highlights a negative P/E Ratio (Adjusted) of -2.2 for IGL and a PEG Ratio of 0.02, indicating a discrepancy between the company’s expected earnings growth and its current market price. This mismatch may be a source of concern for investors. Additionally, the stock’s Price % of 52 Week High stands at 14.23%, suggesting it is currently trading at a notably lower valuation compared to its 52-week peak.
Nonetheless, it is essential to acknowledge that Indraprastha Gas remains a prominent player in the Gas Utilities sector, as indicated by InvestingPro Tips. The company’s track record includes maintaining dividend payments for 20 consecutive years and consistently increasing dividends for the past 6 years, underlining its commitment to delivering value to shareholders. Moreover, IGL boasts a stronger cash position than debt on its balance sheet, contributing to its financial stability in these uncertain times.
For those seeking further insights and real-time metrics, InvestingPro provides additional tips and comprehensive information on return on invested capital, cash flows, and profitability forecasts, among other critical indicators.
