12 March 2019
Update | Sector: Oil & Gas
TP: INR389 (+31%)
Far away from the electric shock
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
208.2 / 3
320 / 215
The Delhi Cabinet aims to introduce 1,000 electric buses by Jun’20. This is in addition
to CNG buses (500 low-floor and 500 normal).
We note that Energy Efficiency Services Ltd (EESL) has not progressed much with the
earlier order of 10,000 electric cars. More so, the recent tender of additional 10,000
cars has been quashed indefinitely.
Multiple medium term triggers exist in the form of (a) intercity/highway travel on
CNG, (b) higher conversion of LCVs, (c) increasing differential of diesel vehicles v/s
petrol/CNG post the BS-VI implementation, (d) increasing launches from OEMs, (e)
newer applications, (f) stricter enforcement of pollution norms in industries, and (g)
growth in existing and newer areas.
Financials Snapshot (INR b)
2019E 2020E 2021E
Shareholding pattern (%)
Dec-18 Sep-18 Dec-17
Electric vehicles not ready to take off
EESL floated its first tender for 10,000 EVs in Aug’17, with the first phase of 500
cars to be delivered by Nov’17 and the rest by Jun’18. The tender was closed
after much delay in Jan’18, with revised delivery deadline of Mar’19.
Only 10% of the contracted EVs were delivered by end-Dec’18, extending the
timeline further to Sep’19.
EESL’s tender in Nov’17 for 250 charging stations was finally awarded after
cancellation of the first tender (Sept’17) and the follow on snap-bid (Oct’17),
pitiful when compared against the ~4,000 charging stations required for
efficient running of 10,000 EVs.
The second tender for additional 10,000 EVs in Apr’18 got cancelled as the
automobile companies awaited government policies on specifications for the
FII Includes depository receipts
Stock Performance (1-year)
Sensex - Rebased
Expect insignificant impact on volumes in the medium term
Hence, we believe that EVs may have an impact only in the longer run. In the
short- to medium-term, new areas like Rewari, Karnal and Muzzafarnagar
would add 0.2mmscmd capacity each in the next 3-4 years.
Haryana City Gas sells 0.4mmscmd; of this, it sources 0.25mmscmd from IGL
with margins to IGL being minimal. Post the takeover, IGL may increase sales
volume to ~1-1.5mmscmd within three years.
Newly awarded geographical areas in the tenth round — (a) Kaithal (Haryana),
(b) Ajmer, Pali and Rajsamand (Rajasthan), and (c) Kanpur, Fatehpur and
Hamirpur (Uttar Pradesh) – would further add to the growth in the medium
Implementation of BS-VI would increase the cost differential of diesel vehicles
over petrol/CNG vehicles. Increasing penetration of natural gas with
implementation of the ninth and tenth round of CGD bidding is expected to
boost intercity/highway travel on CNG.
(Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529
(Sarfraz.Bhimani@MotilalOswal.com); +91 22 61291566
Investors are advised to refer through important disclosures made at the last page of the Research Report.
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