Indraprastha Gas witnessed a sharp rise in share prices today as the judiciary and government focus on controlling pollution in the Delhi by encouraging use of CNG as the preferred fuel for vehicles over diesel.

On Thursday, the Supreme Court asked the state and central government to come up with a solution to clean Delhi's air. It has proposed: 1) a 3-month registration ban on diesel luxury cars/SUV (over 2000cc); 2) sharp increase in green tax on vehicles entering Delhi; and 3) phasing out trucks older than 10 years.

"As pollution levels are worse this winter, there is emergency focus on it by the judiciary and state/central governments. We see IGL as a key winner of this focus, as volume can sharply revive," Nomura said. While margins have been relatively weaker, they are likely to revive as gas costs are set to decline sharply, it opined.

"Compared to anaemic 1-3% volume growth in the last 2 years (average 20% in the previous 5 years), we assume growth to revive to 8-9% from FY17F. After 3% decline in FY16F, we expect earnings to move up 22% in FY17F as volumes/margins revive. We roll over of our DCF valuations to Sept-17, and our target price rises to Rs 600 from Rs 515," Nomura said.

Shares of Indraprastha Gas are trading at Rs 502.00, up Rs 33.45, or 7.14% at the Bombay Stock Exchange (BSE) on Wednesday at 2:39 p.m.

Total volume of shares traded on the bourses today was higher by 1,131.62% to 4,627,789 compared with 22-day average volume of 375,748.