India's city gas distribution companies fall after administered price allocation cut

Indraprastha Gas

16/04/2025 08:12

Updates

** Shares of Mahanagar Gas MGAS.NS, Indraprastha Gas IGAS.NS, Gujarat Gas GGAS.NS down 4.4%, 2% and 0.5%, respectively

** Government cuts administered price mechanism (APM) gas allocation to city gas distributors, effective April 16

** Antique Stock Broking says estimated de-allocation at about 3 mmscmd vs market expectations of about 0.8 mmscmd to 1 mmscmd

** Adds, assuming APM fully meets domestic PNG needs, CNG allocation drops to 38% for IGAS/MGAS (from 50%–51%) and to 34% for GGAS (from 48%)

 ** Estimates CNG gross margin hit of 0.9 to 1 rupees/scm, along with varying EBITDA impacts

** Jefferies says, for MGAS, APM gas allocation cut translates to a 26% drop in CNG volume which is sharper then its estimate of 20% reduction in APM availability for CNG in FY26

** See sharp compression in return on capital employed for MGAS to 13% over FY26-27 vs 22% over FY23-25 - Jefferies

** YTD, IGAS down 15.8%, MGAS down 2.7%, GGAS down 13.9%

(Reporting by Ashish Chandra in Bengaluru)

((ashish.chandra@thomsonreuters.com (+91 7982114624))