Fundamentals
INDRAPRASTHA GAS
Ticker: 532514
BUY: Rs 284.10
Target: Rs 325
Indraprastha Gas Limited (IGL) operates through two segments, namely CNG (compressed natural gas) and PNG (piped natural gas) having prominence in Delhi. During Q2FY19, the revenue was up by 26.2 per cent YoY to Rs 1421.5 crore, led by 12.9 per cent growth in volumes. EBITDA grew by 9.4 per cent YoY but EBITDA margin declined from 25 per cent to 21.7 per cent on a YoY basis. PAT for the quarter grew by 10.9 per cent YoY to Rs 187.3 crore. The government's initiatives to curb pollution such as restricting diesel CVs from entering Delhi will boost the volumes going forward. The company plans to open 38-40 CNG outlets in FY19, including 4 in Gurugram, 3 in Rewari and 2-3 in Karnal and additional 50 stations are likely to be opened in FY20. Considering all these factors, we recommend it as a BUY.
MPHASIS
Ticker: 526299
BUY: Rs 1000.25
Target: Rs 1145
Mphasis is IT solutions provider in the cloud and cognitive services. Its segments include banking and capital market, insurance, IT, communication and entertainment and emerging industries. During Q3FY19, it posted strong performance with growth in revenue by 12% YoY and profit by 29% YoY. Its direct core channel and DXC channel maintained their performance. However, it was affected by decline in revenue from the digital risk. Also, going ahead, we expect the Blackstone portfolio to grow at a healthy pace by this year-end, which is a major contributor to its core business. Considering the strong performance, coupled with the likelihood of improvement in its core business, we recommend our investors to BUY this stock.
