Indraprastha Gas Limited (IGL) is making headlines today with its 1:1 bonus share issue, marking a significant milestone for the company. January 31, 2025, has been set as the record date to determine which shareholders are eligible to receive these bonus shares. This means that anyone holding IGL shares as of today will receive an additional share for every share they own, effectively doubling their holdings at no extra cost.
What Does This Mean for Shareholders?
This bonus issue is IGL's first-ever, making it a noteworthy event not just for the company but also for its investors. The bonus shares will be allotted on February 3, 2025. This move is seen as a way to enhance shareholder value and reflects IGL's confidence in its future growth prospects. Kamal Kishore Chatiwal, the Managing Director of IGL, emphasized that this initiative demonstrates their commitment to creating long-term value for shareholders and rewarding them for their trust and support.
Jefferies' Upgrade Boosts Stock Outlook
In addition to the bonus news, global brokerage firm Jefferies has upgraded IGL's stock rating from "Underperform" to "Buy," projecting a 32% upside in the stock price. Following this upgrade, IGL's shares saw a 3% increase, reaching an intraday high of ₹394 on January 29, 2025. Jefferies cited several factors for this positive outlook, including IGL's success in securing long-term liquefied natural gas (LNG) contracts at favorable prices and significant upward revisions in earnings per share estimates for the coming fiscal years.
Key Takeaways
- Record Date: January 31, 2025
- Bonus Shares Allotment Date: February 3, 2025
- Upgrade by Jefferies: From "Underperform" to "Buy"
- Projected Stock Upside: 32%
This combination of a bonus issue and an upgraded stock rating paints a bright picture for IGL and its shareholders. Investors are encouraged to keep an eye on their portfolios as these developments unfold.
What factors led Jefferies to upgrade IGL to 'buy'?
Jefferies' recent upgrade of Indraprastha Gas Limited (IGL) to a "Buy" rating is based on several key factors that indicate a positive outlook for the company. Here are the main reasons behind this decision:
Increased Earnings Projections
Jefferies has significantly raised its earnings per share (EPS) estimates for IGL, projecting increases of 52% for FY26 and 55% for FY27. This substantial revision reflects expected strong profit growth driven by various strategic moves by the company.
Long-Term LNG Contracts
A major factor contributing to Jefferies' optimism is IGL's success in securing significant long-term liquefied natural gas (LNG) contracts at favorable prices. These contracts are expected to provide a stable revenue stream and enhance profitability, positioning IGL advantageously in the market.
Resilience Despite Volume Challenges
While IGL experienced muted volume growth in its third quarter, Jefferies remains confident about the company's overall outlook. The brokerage firm suggests that the near-term impact on Return on Capital Employed (ROCE) will be limited, indicating that IGL's profitability and operational efficiency are likely to remain robust despite short-term challenges.
Stock Performance
Following the upgrade announcement, IGL's stock rose by 3%, reaching an intraday high of ₹394, signaling positive investor sentiment and confidence in the company's future prospects. In summary, Jefferies' upgrade reflects a combination of strong earnings forecasts, strategic contract acquisitions, and resilience in profitability, making IGL an attractive investment opportunity moving forward.
With inputs from agencies
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