India Ratings & Research (Ind-Ra) has assigned Indraprastha Gas a long-term issuer rating of 'AAA'. The outlook is stable.

The ratings reflect IGL's strong business profile due to its dominant position as the sole city gas distribution (CGD) company in Delhi, Ghaziabad, Noida and Greater Noida along with the infrastructure exclusivity it enjoys in the region.

The ratings are also supported by the favourable demand outlook for the CGD business especially in Delhi, as the use of compressed natural gas (CNG) in public transportation is mandatory. Although IGL's marketing exclusivity ended in FY12, it is unlikely to lose the dominant market position in the medium term due to its first mover advantage and high entry barriers.

IGL also has a robust financial profile with revenue, EBITDA and cash flow from operations of Rs 33,670 million, Rs 7,599 millio and Rs 5,872 million in FY13 (year end March), respectively. As a result, its credit metrics are comfortable with net financial leverage and net interest coverage of 0.5x and 13.5x in FY13, respectively. Due to increasing dependence on costly imported gas, IGL's profit margins have been declining but margins per scm of gas have continuously increased.

Shares of the company gained Rs 1.4, or 0.52%, to trade at Rs 270.40. The total volume of shares traded was 10,961 at the BSE (10.36 a.m., Wednesday).