With valuations at historic lows, should you be investing in Indraprastha Gas?

Indraprastha Gas (IGL) has been in the market ire for many years. Government-led regulatory changes are primarily to be blamed. And recently, the government cut its subsidised gas allocation to city gas distributors by another 20 per cent, the second time this year. What this means is that IGL, which gets a part of its gas supply from the government at lower prices, will now have to fill the gap by importing costlier liquefied natural gas (LNG). This will raise costs and shrink margins. The stock, consequently, has extended losses and has lost 44 per cent from its September high. The market action seems overdone. IGL, despite these setbacks, remains a solid player that has grown its profit after tax by 17 per cent every year from FY19 to FY24. Even if you completely strip the company of its low-priced government supply, it remains in a comfortable spot. We have assessed this below. What happens in the worst-case scenario? Let's assume the worst. That the government completely ends its subsidised supply to IGL. Since it gets 33 per cent of its gas requirements met