01
Sep
12

Supreme court defers hearing in IGL-PNGRB case to November..

Yesterday, the Supreme court has deferred the next hearing of IGL-PNGRB case to November. Earlier this year in April, PNGRB had directed gas utility company, IGL to reduce compression charges and network tariffs. IGL had appealed against this order in Delhi high court and the court ruled in IGL favor (https://writingoptions.wordpress.com/2012/06/01/igl-zooms-29-percent/). After this ruling, gas regulator PNGRB went to Supreme court.

I think there was some optimism among some market participants regarding favorable judgement in IGL favor. This was reflected in good premium in OTM calls. It was understandable given the fact that had the decision been in IGL favor, lot of OTM calls would have become ITM. I had no position in IGL prior to the news related to case. But as soon as the news regarding case deferment came, I was selling OTM calls aggressively. I have no doubt in mind that IGL will not cross 300 before November. Yes, there might be QE3 announcement by Fed in its September 12-13 meeting, still IGL will find it tough to cross 280-300.

IGL is also under scanner of parliamentary standing committee regarding higher tariffs (http://www.moneycontrol.com/news/cnbctv18-comments/igl-tariffs-under-par-standing-committee-scanner_749089.html). Yesterday, buy calls on IGL were given by Ashwani Gujral on ET Now and SP Tulsian on CNBC-TV18. How can you give technical buy call on a particular stock just before an important event ? Fundamental analysis by SP Tulsian always leaves a lot to be desired. Given uncertainty regarding regulatory environment, it would be unfair to say that earlier it used to trade at 16-17 P/E and now it can rule at 13-14. I have no doubt that even if PNGRB loses the case in Supreme court, it might not be the end of regulation for this sector. Monopoly days for IGL are over and in some form or other tariff regulation would be there. P/B (Price/Book) ratio is far better valuation multiple for regulated business like city gas distribution.

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10 Responses to “Supreme court defers hearing in IGL-PNGRB case to November..”


  1. 1 Khan
    December 6, 2012 at 2:27 am

    any update on the hearing or the verdict

  2. 4 M K Swarnkar
    December 13, 2012 at 11:16 am

    I think it is in December third week. Last time hearing was on 21st November.

  3. 7 HASSAN JAWAID
    December 20, 2012 at 9:26 pm

    when was hearing .last time the supreme court deferred by 4 weeks

  4. 8 HASSAN JAWAID
    December 20, 2012 at 9:27 pm

    I THINK THE HEARING IS ON DUE TOMORROW


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