Friday saw a significant drop in the share price of Indraprastha Gas (NSE:IGL) following the approval of the 'Delhi Motor Vehicle Aggregator and Delivery Service Provider Scheme' by Chief Minister Arvind Kejriwal. The new policy, which legalizes electrically-operated bike taxis and introduces regulatory measures for app-based aggregators and delivery services, triggered considerable volume action on the National Stock Exchange.
The scheme, also known as EV Policy 2.0, is yet to receive final clearance from Governor VK Saxena. It mandates a shift towards green mobility, requiring all fleets of cab aggregators, delivery services, and e-commerce entities operating in Delhi to transition to electric vehicles by 2030. This impending shift has significant implications for traditional gas providers like Indraprastha Gas.
In response to these developments, Jefferies India downgraded its rating for IGL from 'buy' to 'hold'. The financial services company also significantly reduced its target price for the gas distributor, reflecting the potential impact of the new policy on IGL's future business prospects.
InvestingPro data shows a negative P/E Ratio (Adjusted) of -2.2 for IGL and a PEG Ratio of 0.02, indicating that the company’s earnings growth is not expected to keep up with its price. This could be a cause for concern for investors. Furthermore, its Price % of 52 Week High is at 14.23 %, suggesting the stock is trading at a relatively low price compared to its 52-week high.
Despite the current challenges, it's worth noting that Indraprastha Gas is a prominent player in the Gas Utilities industry, as highlighted by InvestingPro Tips. The company has maintained dividend payments for 20 consecutive years and has raised its dividend for 6 consecutive years. This shows a strong commitment to returning value to shareholders. Moreover, the company holds more cash than debt on its balance sheet, providing some financial stability in these uncertain times.
For those interested in further insights and metrics, InvestingPro offers additional tips and real-time metrics. These include information on companies' return on invested capital, cash flows, and profitability predictions among others.
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